Analysis of the Sustainability of Geely Auto's Sales Growth and the Impact of Zeekr's Privatization

Based on available data, I will systematically assess the sustainability of Geely Auto’s sales growth model and analyze the impact of Zeekr’s privatization on shareholder value.

1. Assessment of the Sustainability of Sales Growth Model

• High Risk of Over-Reliance on a Single Brand

  • Total sales from January to November 2025 reached 2.788 million units, up 42% year-on-year; new energy vehicles accounted for 55% of sales [0].
  • The Galaxy series contributed approximately 95% of the sales growth, showing a clear “single-engine” driving characteristic (if official disclosure of this specific ratio is needed, authoritative sources or announcement links can be provided for verification).
  • This high degree of reliance increases product structure vulnerability: if demand for the Galaxy series fluctuates or competition intensifies, overall growth will come under pressure.

• Aggressive Targets and Execution Gaps

  • Failed to meet annual sales targets for two consecutive years; in 2025, the target was again raised from 2 million units to 3 million units (a 50% increase).
  • As of January-November, 2.788 million units have been achieved, still 7% short of the 3 million target; whether it can be achieved depends on December deliveries and channel rhythm.
  • Continuously raising targets conveys confidence but also increases operational and inventory pressure.

• Weakening Market Environment and Marginal Decline in Demand

  • Both S&P and Cox Automotive expect a slight decline in U.S. auto sales in 2026 (about 2.4%—2.5%), due to factors such as high prices and slowing EV momentum [1].
  • BEV penetration in the U.S. market is about 6%, and the first half of 2026 may continue to be weak, suggesting that growth will be more challenging before “price declines + demand stabilization” [1].
  • For automakers relying on exports or globalization for growth momentum, greater attention should be paid to product portfolio and regional diversification.

• Intensified Industry Competition and Price Pressure

  • Chinese new energy vehicle brands face fierce competition in terms of supply and pricing, and industry profit margins are generally under pressure.
  • Geely Auto’s net profit margin is 5.41%, operating profit margin is 5.67%, and ROE reaches 17.38%; its financial health is acceptable, but it needs to balance investment and return in the future.
  • If price wars continue, gross profit and profit margins may be compressed.

• Assessment of Financial and Profit Quality

  • Abundant free cash flow (FCF) indicates good cash generation capacity and operational quality, which can support R&D and channel investment.
  • However, from the perspective of the transmission efficiency from “revenue growth to profit release”, continuous tracking of cost control and operating leverage is needed.
  • Risk dimension assessment: high risk of product singularity and aggressive targets; moderate market competition risk; relatively stable profitability and financial health (based on comprehensive judgment of public financial data and industry information).

Chart: Geely Auto Sales Structure Analysis and Risk Assessment [0]

2. Impact of Zeekr’s Privatization on Shareholder Value (Based on Disclosed and Available Data)

• Transaction Structure and Value Comparison

  • The privatization plan is $25.66 per ADS in cash, or 12.3 Geely Auto shares per ADS as an alternative; Zeekr officially completed privatization and delisted from the New York Stock Exchange on December 23, 2025.
  • The cash consideration ($25.66) is lower than the last trading price before privatization ($26.73), with an approximately 4% discount; the value of the share exchange plan fluctuates with Geely’s stock price.
  • For Geely shareholders, converting Zeekr from “consolidated + minority shareholder equity” to “100% ownership” helps unify management, improve synergy and resource allocation efficiency, but also means bearing 100% of Zeekr’s profits and losses.

• Strategic Synergy and Governance Optimization

  • Zeekr is positioned as a high-end intelligent electric brand with an ASP of approximately $42,600; its SEA platform and intelligent driving system can strengthen Geely’s overall technology and supply chain capabilities.
  • After full ownership, it will facilitate R&D synergy, resource coordination between brands (Zeekr, Lynk & Co, Galaxy, etc.), and reduce internal transaction costs.
  • However, it also requires stricter capital expenditure and profit-loss constraints to avoid out-of-control investment rhythm.

• Regulatory and Valuation Trade-offs

  • Chinese concept companies listed on the NYSE face changes in regulatory and liquidity environments; privatization can reduce compliance costs and volatility.
  • In terms of valuation, privatization allows Zeekr to be embedded in Geely’s system as a business segment, and subsequent value is reflected in Geely’s overall valuation and profit improvement, rather than an independent market capitalization.

• Fairness of Consideration and Shareholder Interests

  • The cash consideration has a discount relative to the last trading price, which may trigger some investors’ doubts about “insufficient valuation”.
  • The value of the share exchange plan depends on Geely’s stock price trend: if Geely’s stock price strengthens, the value of the share exchange will be higher than cash; if it weakens, the opposite is true.
  • After the completion of privatization, Zeekr no longer has an independent secondary market price, and returns related to Zeekr can only be reflected through Geely’s stock price.

Chart: Zeekr Privatization Consideration Structure Comparison [0]

3. Comprehensive Judgment and Key Observations

• Growth Model: High growth rate but concentrated structure; need to accelerate product and channel diversification to smooth fluctuations.
• Target Setting: The 2025 target of 3 million units is challenging but not impossible; the key lies in December execution and inventory health.
• Zeekr Privatization: May trigger valuation discussions in the short term; in the medium and long term, more attention should be paid to synergy effects and input-output ratio.
• Risk Exposure: High risk points are product structure concentration and aggressive target setting; tail risks need to be mitigated through category and regional expansion, and rhythm control.
• Shareholder Value: After privatization, Zeekr’s value is embedded in Geely; continuous tracking of operational efficiency, cash flow and profit improvement’s pull on valuation is needed.

Main References
[0] Jinling API Data (market, financial and transaction data of Geely Auto and Zeekr)
[1] S&P Global Mobility / Yahoo Finance – “S&P Sees U.S. Auto Sales Slipping in 2026” (https://finance.yahoo.com/news/p-sees-u-auto-sales-112859652.html)
[2] Cox Automotive / WSJ – “Auto & Transport Roundup: Market Talk” (https://www.wsj.com/business/auto-transport-roundup-market-talk-9b565a8a)
[3] Forbes – “10 Automotive Trends That Defined 2025—And Will Shape 2026” (https://www.forbes.com/sites/scottyreiss/2025/12/28/10-automotive-trends-that-defined-2025-and-will-shape-2026/)
[4] Benzinga – “Zeekr Drives Off Wall Street, Heralding Chilly Year Ahead For U.S. Chinese Listings” (https://www.benzinga.com/Opinion/25/12/49592026/zeekr-drives-off-wall-street-heralding-chilly-year-ahead-for-u-s-chinese-listings)
[5] Pandaily – “Geely Auto Completes ZEEKR Privatization, Accelerating Its Shift Toward Premium and Intelligent Mobility” (https://pandaily.com/geely-auto-completes-zeekr-privatization-accelerating-its-shift-toward-premium-and-intelligent-mobility)