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On November 14, news finally emerged that the merger of Zeekr and Lynk & Co has been finalized. Today, Geely Holding Group announced the optimization of the equity structure of Zeekr and Lynk & Co, aiming to streamline equity relations, reduce related-party transactions, and eliminate horizontal competition.

Geely Holding will transfer its 11.3% stake in Zeekr Intelligent Technology to Geely Automobile Holdings Limited. After the transaction, Geely Automobile's shareholding in Zeekr will increase to approximately 62.8%. Zeekr will hold a 51% stake in Lynk & Co, with the remaining 49% continuing to be held by a wholly-owned subsidiary of Geely Automobile.

The two brands, which were previously siblings, have now distinguished themselves, with Zeekr taking control of Lynk & Co.

According to Tianyancha data, the shareholders of Lynk & Co are Ningbo Geely Automobile Industry Co., Ltd. (50% stake), Volvo Cars (China) Investment Co., Ltd. (30% stake), and Zhejiang Geely Holding Group Co., Ltd. (20% stake).

According to the announcement of Geely Automobile, 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, respectively. Simultaneously, Zeekr will subscribe to and purchase additional registered capital from Lynk & Co at a cost of approximately 367 million yuan.

Volvo Cars announced today that it will transfer its 30% stake in Lynk & Co to Zeekr for a consideration of 5.4 billion yuan. According to the terms of the transaction, the consideration will be paid in cash, with 70% paid upon completion of the transaction and the remaining 30% plus interest paid one year after completion. The transaction is expected to be completed in the first quarter of next year.

This transaction will allow Volvo and Geely Holding to completely exit Lynk & Co. Based on the transaction terms, the valuation of Lynk & Co is approximately 18 billion yuan.

'Internal friction' begins, expected merger

The main reason for this merger may be the emergence of cracks in the 'demarcation line' between Lynk & Co and Zeekr, leading to internal friction. This can also be seen from the phrase 'eliminate horizontal competition' in Geely Holding's announcement.

With the rapid growth of the new energy vehicle market in the past two years, Lynk & Co, which mainly focuses on fuel vehicles, has ventured into the new energy field. In March this year, it launched its first range-extended sedan, the Lynk & Co 07EM-P, and has subsequently introduced a series of range-extended vehicles in a short period.

Inquiries show that most of Lynk & Co's new energy vehicle models are priced between 130,000 and 180,000 yuan, which is generally considered below 200,000 yuan in the context of China's new energy vehicle market. In contrast, Zeekr's popular models such as the 001 and 007 are priced in the 200,000 to 300,000 yuan range.

It is evident that there is no overlap in the audience for both brands in terms of vehicle types or prices.

Meanwhile, both have delivered impressive results in their respective fields.

According to Geely's latest financial report, sales of Lynk & Co and Zeekr exceeded 30,000 and 25,000 units, respectively, in October this year. In the first three quarters of this year, Lynk & Co sold 169,800 units, and Zeekr sold nearly 150,000 units, together accounting for nearly 30% of Geely Group's total sales.

However, this harmonious scene came to an abrupt end in September.

On September 5, Lynk & Co officially entered the pure electric vehicle market, launching its first pure electric vehicle, the Z10, priced between 196,800 and 288,800 yuan.

It is evident that these two sibling brands are now competing for the same market.

As the twin stars of Geely Automobile, Lynk & Co focuses on fuel vehicles and range extenders, while Zeekr focuses on pure electric vehicles. Their positions are clear, parallel but not overlapping. However, Lynk & Co's sudden foray into Zeekr's territory is bound to impact both brands' sales. After all, they both rely on Geely and are bound to have many overlaps in structural processes and technical solutions.

For consumers, it doesn't matter which brand they choose, but for Geely, this is internal friction between its left and right hands.

Above is Zeekr 007, below is Lynk & Co Z10

Furthermore, due to its similarity in appearance and craftsmanship to Zeekr's 001 and 007 models, the Z10 has received complaints from many users since its launch.

Whoever wears the same outfit feels awkward.

As a result, the cumulative sales of the Z10 in its first two months on the market were only 4,871 units. While this cannot be described as 'dismal,' it is certainly unsatisfactory. For comparison, Xiaomi's competing model, the SU7, sold 15,688 units in its first two months on the market, and that was under the premise of insufficient production capacity.

With neither internal nor external advantages, Lynk & Co is clearly struggling to cope.

On the other hand, Zeekr, which has firmly adhered to the pure electric route, has also defected to range extenders. Zeekr recently revealed that it will launch a large flagship SUV compatible with both pure electric and super hybrid powertrains in the fourth quarter of next year.

This also means that the parallel paths of Lynk & Co and Zeekr will intersect again in the future. Therefore, a merger may be the expected and optimal outcome.

In the future, the two brands are expected to avoid direct competition by launching corresponding products in different price ranges, achieving a comprehensive layout to jointly answer external threats.

Zeekr and Lynk & Co aim for annual production and sales of one million vehicles

It is reported that in September this year, Geely Holding Group issued the "Taizhou Declaration," announcing that the company has entered a new stage of strategic transformation. The group will focus on the automotive industry, deploy the technology ecosystem, enhance competitiveness, and promote sustainable development through five major initiatives: strategic focus, strategic integration, strategic synergy, strategic stability, and strategic talent.

Previously, Geely Automobile announced the integration of Geometry into the Yinhe brand, and this merger is another initiative in Geely Holding's strategic transformation.

According to the announcement, 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 Yinhe and Xingrui are positioned as mainstream brands covering the mainstream market.

Geely expects Zeekr and Lynk & Co to achieve annual production and sales of one million vehicles by the end of 2026.