Whoever goes further will hold the dominant position in the future merger

Text

The upcoming launch of the Lynk & Co Z10 marks the brand's official foray into the pure electric vehicle market. Whether Lynk & Co will engage in internal competition with Zeekr in the future has become a hot topic of conversation.

At least based on current market information, Lynk & Co does not want to mention Zeekr, and internal training for Lynk & Co Z10 sales personnel explicitly prohibits mentioning the Zeekr 001. However, as sister brands sharing the same parent company, and with the Lynk & Co Z10 and Zeekr 001 sharing highly similar production platforms and designs, it is inevitable that consumers will compare the two.

Some people applaud Lynk & Co's entry into the pure electric vehicle market, while others are confused. Lynk & Co has traditionally focused on hybrid vehicles, yet amidst the growing popularity of hybrids, it has chosen to enter the pure electric market, a move that puzzles many. Moreover, in the pure electric segment, Geely already has Zeekr.

Of course, Zeekr is not idle either and has plans to launch hybrid models in 2025, extending its reach into the hybrid market where Lynk & Co has traditionally dominated.

For many years, Lynk & Co and Zeekr have operated independently of each other. However, from a third-party perspective, the recent "unusual behavior" of these two sister brands suggests that competition between them is inevitable. So, within the Geely Group, what is the relationship between Lynk & Co and Zeekr? Are they complementary or rivals?

Is Lynk & Co no longer willing to play the "good guy" role?

The relationship between Zeekr and Lynk & Co within the Geely Auto Group is more complex than it appears. Although both brands belong to Geely, they are quite different. Zeekr is Geely's "own child," whereas Lynk & Co is a joint venture between Geely and Volvo. As a result, Zeekr and Lynk & Co have distinct brand development strategies, goals, and market positions, and they receive different resources within the Geely Group.

Lynk & Co has traditionally focused on hybrid vehicles for its electrification efforts. Even though it once launched the pure electric Lynk & Co ZERO, due to various complications, the ZERO eventually became the Zeekr 001, leaving Lynk & Co without a pure electric offering in the market for years. Meanwhile, Zeekr established a strong competitive position in the pure electric segment with the Zeekr 001.

This time, Lynk & Co does not want to miss out on the pure electric vehicle market again and has unveiled the Lynk & Co Z10. Like the Zeekr 001, the Z10 is also based on the SEA Architecture, and their designs and market positions overlap in many ways. Therefore, competition between the Z10 and the 001 is inevitable.

From Lynk & Co's perspective, the brand indeed needs a pure electric vehicle to fill the gap in its new energy vehicle lineup. Strategically, Lynk & Co positions itself as a global premium new energy brand, indicating its ambitions extend beyond just the Chinese market to Europe and even globally, as evidenced by the choice of Sweden for the Z01's launch event.

In the global automotive market, pure electric vehicles enjoy higher market acceptance than hybrids. For Lynk & Co to build a competitive advantage, pure electric products are essential. Lynk & Co is unlikely to entrust this task to Zeekr, even if Geely is willing, Volvo may not be.

Moreover, Lynk & Co needs a new model to turn around its current difficulties. Relying on existing models, Lynk & Co has struggled to achieve desirable returns, with losses of 1.1 billion yuan last year and 250 million yuan in the first half of this year. Although the launch of multiple EM-P models led to positive growth, Lynk & Co still lags behind Zeekr in development pace. Zeekr's focus on pure electric vehicles has not only driven sales growth but also led to a successful IPO, making it the fastest new energy vehicle brand to go public.

Currently, Lynk & Co is losing ground within Geely, sandwiched between Zeekr and Geometry. Lynk & Co desperately needs a hit product to change its predicament. By launching a pure electric vehicle, Lynk & Co can fill product gaps and expand its customer base.

Geely won't let Zeekr lose

Zeekr is also active, entering the hybrid vehicle market that Lynk & Co dominates. According to Zeekr's plans, a large flagship SUV with both pure electric and hybrid powertrains will be launched in the fourth quarter of 2025.

Zeekr is doing better in the market than Lynk & Co. Besides the achievements mentioned above, Zeekr has also achieved profitability. According to Zeekr, under Hong Kong accounting standards and excluding the impact of share-based payments, its net loss narrowed significantly to 70 million yuan in the first half of the year, achieving profitability in the second quarter.

In terms of sales, Zeekr has also performed well. According to data released by Zeekr on July 31, the company delivered 300,000 vehicles in just 33 months, making it the fastest new energy vehicle brand to reach this milestone.

With its pure electric vehicle business developing steadily, Zeekr is now exploring the hybrid vehicle market. Hybrids are becoming increasingly popular, with sales growth outpacing pure electric vehicles. The impressive performance of hybrid vehicles from NIO, XPeng, and other new energy vehicle makers has boosted the confidence of automakers in this segment. Against this market backdrop, Zeekr's foray into hybrid vehicles is a natural step towards better development.

Zeekr's approach to hybrid vehicles is more strategic than Lynk & Co's. By choosing a large flagship SUV, a gap in Lynk & Co's hybrid SUV lineup, Zeekr can avoid direct competition and create a differentiated market position. However, it remains to be seen whether Zeekr will introduce lower-priced hybrid SUVs in the future.

From the perspective of both Zeekr and Lynk & Co, as their product overlaps increase, one brand inevitably eating into the other's market share is understandable. Optimistically, this "internal competition" may not be entirely negative, as it keeps market share within the family rather than falling into the hands of competitors.

It's worth noting that Li Shufu, the actual controller of Zeekr, can be considered the "own child" of Zeekr. An Conghui, the CEO, has also played a pivotal role in the establishment and operation of Zeekr. This underscores the importance of Zeekr within the Geely Auto Group. Zeekr's mission is to lead Geely's expansion into the smart pure electric vehicle market, carrying the responsibility of transforming Geely's business model.

It is evident that Zeekr holds a crucial position within the Geely ecosystem. Facing intense competition in the electrification trend, Zeekr cannot afford to lose. As the pure electric vehicle market cools and low-end models dominate sales, Zeekr, focusing on mid-to-high-end vehicles, must diversify its offerings. Hybrids are gaining popularity, making it prudent for Zeekr to explore this segment to expand its business.

Ultimate destiny: a merger?

While future competition between Lynk & Co and Zeekr is inevitable, Geely's intentions likely extend beyond simply enriching its product lineup or fostering internal competition among its subsidiaries.

As mentioned in our previous article, "Geely Shakes Up Its Research Institute," the company is seeking cost-cutting measures amid market pressures. By promoting the widespread adoption of the SEA Architecture through its multiple brands, including Zeekr and Lynk & Co, Geely aims to further reduce costs.

Geely's multi-brand strategy, which includes Polestar, Royal Blue, Geometry, and the Galaxy series in addition to Zeekr and Lynk & Co, enhances its product coverage and meets diverse market demands. This strategy also provides consumers with a wider range of vehicle options.

However, having multiple brands can also lead to product overlap, potentially skewing sales towards certain models. For instance, the Zeekr 001 and Polestar 4, both based on the SEA Architecture, have similar market positions, but the Zeekr 001 outsells the Polestar 4. A similar pattern can be observed in other brands, such as the Porsche Taycan and Audi e-tron GT, both derived from the J1 platform, but with markedly different market performances.

The Lynk & Co Z10 and Zeekr's large hybrid SUV are just the beginning of the competition between the two brands. More models are likely to be introduced in the future. If Zeekr and Lynk & Co continue to deepen their presence in the hybrid and pure electric vehicle segments, respectively, and expand their model lineups, a confrontation between the two brands seems inevitable. How Geely will balance their relationships, resources, and differentiate their offerings will be crucial.

While "new forces" in the automotive industry were once hailed for their financial resources, technology, and innovative spirit, the unpredictable market landscape has forced even these wealthy players to compete fiercely for survival. The unfolding drama between Lynk & Co and Zeekr promises to be a thrilling spectacle.

Given the increasingly competitive market environment and growing pressures on automakers, Electric Drive speculates that the eventual outcome of the internal competition between Lynk & Co and Zeekr could be a merger. After all, their market positions and product layouts are becoming increasingly similar, blurring the lines of differentiation between the two brands.