Photo credit: Visual China

Blue Whale News, November 14 (Reporter Li Zhuoling) Following the release of the "Taizhou Declaration" in September, Geely Holding Group is accelerating its restructuring and reorganization of its internal organizational structure and brands.

In the afternoon of November 14, after much market speculation, Geely Holding officially announced the optimization of its equity structure for Zeekr and Lynk & Co. It is reported that Geely Holding will transfer its 11.3% stake in Zeekr Intelligence Technology (hereinafter referred to as "Zeekr") to Geely Automobile Holdings Limited (hereinafter referred to as "Geely Automobile"). Upon completion of the transaction, Geely Automobile's shareholding in Zeekr will increase to approximately 62.8%.

Almost simultaneously, Volvo Cars announced the sale of its 30% stake in Lynk & Co. to Zeekr for a transaction price of 5.4 billion yuan (RMB, the same below). According to Geely Holding, Zeekr will subsequently hold a 51% stake in Lynk & Co., with the remaining 49% continuing to be held by a wholly-owned subsidiary of Geely Automobile.

It is worth noting that both Geely Automobile (0175.HK) and Zeekr (NYSE: ZK) are listed companies. Therefore, this adjustment may imply that Lynk & Co. will be integrated into the listed company of Zeekr, which is in turn controlled by the listed company Geely Automobile. In response to this claim, Geely Holding also confirmed to Blue Whale News, with Yang Xueliang, Senior Vice President of Geely Holding Group, telling Blue Whale News, "Rationalize the equity structure and strengthen and expand 0175."

After 8 years of establishment, Lynk & Co. is to be controlled by Zeekr

The announcement from Geely Automobile provides more details about this adjustment.

It is reported that Geely Holding and Volvo sold their respective 20% and 30% stakes in Lynk & Co. to Zeekr for 3.6 billion yuan and 5.4 billion yuan. At the same time, Zeekr will subscribe to and purchase additional registered capital from Lynk & Co. at a cost of approximately 367 million yuan.

According to the aforementioned announcement from Volvo Cars, the transaction consideration of 5.4 billion yuan will be paid in cash, with 70% paid upon completion of the transaction and the remaining 30% plus interest paid one year after the transaction is completed. The transaction is expected to be completed in the first quarter of 2025.

Upon completion of the acquisition and capital injection of Lynk & Co., Zeekr's shareholding will increase to 51%, achieving controlling interest in Lynk & Co.

Public information shows that Lynk & Co., launched in October 2016, is a joint venture between Geely Holding Group, Geely Automobile Group, and Volvo Cars. Its past products have primarily focused on fuel and hybrid models. Zeekr, on the other hand, was established in March 2021, originally as the Lynk & Co. Electric Vehicle Business Unit, and its first model, the Zeekr 001, is derived from the Lynk & Co. ZERO.

According to earlier market news, the overlap between Lynk & Co. and Zeekr products was a factor that prompted senior management to make the decision to integrate. "Lynk & Co., which entered the market with hybrids but failed in pure electric vehicles, and Zeekr, the pillar brand of Geely's pure electric vehicles that has softened its stance on hybrids, face intense competition. Such overlapping product positioning and investment will undoubtedly plunge sibling brands into vicious competition." However, this claim has not yet received an official public response.

Geely Holding's official statement on this adjustment is to "rationalize equity relationships, reduce related-party transactions, eliminate horizontal competition, and unwaveringly promote the in-depth integration and efficient fusion of internal resources."

At Geely Automobile's third-quarter earnings conference held later that day, Gui Shengyue, CEO of Geely Automobile Holdings Limited, shared the considerations behind the strategic integration of Geely Automobile, Zeekr, and Lynk & Co. He stated that this strategic integration is both imperative based on market strategy considerations and the best timing for Geely Automobile's minority shareholders.

It is reported that in terms of brand positioning, Zeekr is positioned as a global luxury technology brand covering the high-end luxury market; Lynk & Co. is positioned as a global mid-to-high-end new energy brand covering the mid-to-high-end market; Geely Galaxy and China Star are positioned as mainstream brands covering the mainstream market.

Moving forward, Zeekr and Lynk & Co. will strengthen synergies in technology, products, supply chains, manufacturing, marketing and services, and international market expansion, aiming to build Zeekr and Lynk & Co. into a global leading high-end luxury new energy vehicle group with annual production and sales of millions by the end of 2026.

Geely's strategic transformation enters deeper waters, with a major overhaul of internal multi-brands

It is reported that Geely Holding's optimization of the equity structure of Zeekr and Lynk & Co. is a crucial measure to implement the strategic framework of the "Taizhou Declaration." According to the "Taizhou Declaration" released by Geely Holding on September 20 this year, it will focus on the automotive industry and deploy technological ecosystems to enhance competitiveness through five initiatives: strategic focus, strategic integration, strategic synergy, strategic stability, and strategic talent development.

Blue Whale News understands that the first major move in Geely's internal restructuring focused on adjusting and reorganizing Geely Automobile's new energy sector: on the 9th of last month, Geely Automobile just announced the integration of Geometry into the Galaxy brand. This optimization of the equity structure of Zeekr and Lynk & Co. is the second major move officially announced by Geely Holding.

During this period, there have also been many internal adjustments within the Geely Group, such as significant adjustments to the R&D system, reports that Radar Automobile will be integrated into Geely Automobile, and that An Conghui, Chairman of Zeekr Technology, will become Chairman of Polestar, with future potential for further integration or synergy between Polestar and Zeekr.

Additionally, according to an exclusive report by Blue Whale News on November 14, following Radar Automobile, LEVC may also be integrated into Geely Automobile and become a sub-brand. Blue Whale News has reached out to Geely Holding for verification, but had not received a response as of press time. Public information shows that LEVC originated in 1908, with classic models including the TX series, Big Ben, double-decker buses, etc. The company was acquired by Geely Holding Group in 2013 and officially entered China in 2021; in June this year, LEVC's first high-end pure electric MPV, LEVC TX L380, was officially launched.

According to the official website of Geely Holding, its business segments include passenger vehicles, commercial vehicles, technology, automotive sports and culture, mobility, finance, digital technology, and education. Within the passenger vehicle segment, there were previously seven companies, including Geely Automobile, Volvo Cars, Zeekr Intelligence Technology, Lotus Group, Emgrand Auto, LEVC, and Radar New Energy Vehicles.

Currently, apart from the two aforementioned officially announced moves, other rumors have not yet received an official public response. Behind the release of the "Taizhou Declaration," major adjustments within the Geely Group are expected to continue.

According to the previously released "Taizhou Declaration," it is necessary to comprehensively sort out Geely's various business segments, clarify business positioning, formulate medium- and long-term development goals, adjust and optimize the industrial layout structure, unwaveringly promote the in-depth integration and efficient fusion of internal resources, further clarify brand positioning, rationalize equity relationships, reduce conflicts of interest and duplicative investments, and improve resource utilization efficiency.

'Geely used to follow a path of strategic expansion, but now it is entering a phase of strategic focus, which is strategic integration. Some operations will be shut down, merged, or transformed, and the enterprise must remain stable while seeking progress. Everyone must face challenges head-on, continue to build a solid foundation, and hone their internal strength,' said Li Shufu, Chairman of Geely Holding Group, at the time.