Sustainability Analysis of Geely Auto's "Dual Track of ICE and NEV" Strategy Against the Background of Subsidy Reduction

I have collected sufficient data and industry information to compile a systematic and comprehensive analysis report for you.

---

This strategy can effectively offset the negative impact of subsidy reduction through three moats: diversified technical routes, improved brand portfolio, and global layout [0][1]. The company’s outstanding performance in 2025—exceeding sales targets, 90% YoY growth in NEV business, and stable ICE vehicle base—has verified the feasibility of this strategy. However, the subsidy policy will be significantly reduced in 2026 (halved vehicle purchase tax, per-vehicle tax reduction amount reduced from RMB 30,000 to RMB 15,000), coupled with intensified industry price wars, the company needs to continue to focus on product strength enhancement, cost control, and overseas expansion.

---

Geely Auto’s full-year cumulative sales in 2025 reached

, a 39% YoY increase, exceeding the full-year sales target of 3 million units and hitting a record high [0][1]. As of the end of 2025, Geely Auto’s cumulative historical sales have crossed the 20 million unit milestone.

Indicator	2025 Sales	YoY Change	Completion Rate
Total Sales	3.025 million units	+39.0%	100.8%
New Energy Vehicles	1.688 million units	+90.0%	-
ICE Vehicles	1.337 million units	+3.8%	-
Overseas Exports	420,000 units	+1.3%	-

The NEV penetration rate surged from 40.7% in 2024 to

, marking Geely’s official entry into the development phase where NEVs become the main growth driver [0][1]. The NEV business has the following characteristics:

• Industry-leading growth rate
  : The 90% YoY growth rate far exceeds the industry average, reflecting a significant improvement in product competitiveness
• Improved product portfolio
  : Covers price ranges from RMB 50,000 to over RMB 500,000, meeting diversified consumer demands
• Brand synergy effect
  : The three brands Zeekr, Lynk & Co, and Geely Galaxy form differentiated positioning

Brand	2025 Sales	YoY Growth	Core Highlights
Geely Galaxy	1.24 million units	+150%	Exceeded the “Million Galaxy” target
Lynk & Co	350,000 units	+23%	Hit a record high, average price exceeds RMB 335,000
Zeekr	224,000 units	-	Leader in the high-end pure electric vehicle market
Geely China Star (ICE)	1.21 million units	+3%	Exceeded 1 million units for three consecutive years

---

Starting from January 1, 2026, the 11-year NEV purchase tax preferential policy will be significantly adjusted [2][3]:

Policy Item	2025 Policy	2026 Policy	Change Magnitude
Purchase Tax Exemption Ratio	Full Exemption	Halved Collection	Changed from exemption to reduction
Maximum Per-Vehicle Tax Reduction	RMB 30,000	RMB 15,000	-50%
Pure Electric Range Threshold for PHEVs	43km	100km	+133%
Trade-in Subsidy	Fixed-amount Subsidy	Tied to Vehicle Price	Higher threshold

Taking a NEV priced at RMB 200,000 as an example:

• 2025: Purchase tax of approximately RMB 17,700 fully exempted
• 2026: Required to pay approximately RMB 8,800 in purchase tax (halved)
• Vehicle purchase cost increases by approximately RMB 8,800 to RMB 17,700

1. Profit Compression
   : Multiple automakers have launched purchase tax guarantee subsidies (up to RMB 15,000), increasing per-vehicle costs [2]
2. Technical Upgrade Pressure
   : PHEV models need to increase pure electric range to over 100km
3. Inventory Adjustment
   : Models that do not meet the new regulations need to be cleared by the end of the year
4. Intensified Price Wars
   : Brands such as BMW and Tesla have launched price cuts or financial preferential policies [4]

---

The “Dual Track of ICE and NEV” is Geely Auto’s core strategy during the NEV transition period, with its core logic as follows:

"Dual Track of ICE and NEV" = ICE Vehicle Base (Cash Flow Support) + NEV Growth (Strategic Transformation) + Overseas Expansion (Incremental Space)

Indicator	2026 Target	YoY Change	Strategic Intent
Total Sales	3.45 million units	+14.1%	Steady Growth
NEVs	2.22 million units	+31.5%	Accelerated Penetration
ICE Vehicles	1.23 million units	-8.0%	Gradual Contraction
Overseas Sales	YoY Growth Exceeding 50%	-	New Growth Engine

(an increase of 8.5 percentage points compared to 2025)

Geely China Star series sold 1.21 million units in 2025, maintaining a scale of over 1 million units for three consecutive years [1]. The ICE vehicle business contributes:

• Stable dealer network and after-sales service system
• Sustained cash inflow to support NEV R&D investment
• Mature supply chain and production system

The 90% YoY growth rate of NEV sales in 2025 indicates [0][1]:

• Product competitiveness has been recognized by the market
• Successful breakthrough in brand upgrading (Zeekr 9X has an average price exceeding RMB 530,000)
• Sufficient reserves of intelligent and electrification technologies

Geely has built a three-dimensional NEV matrix covering pure electric, super hybrid, and alcohol-hydrogen electric technologies [1]:

• Pure Electric
  : Some models of Zeekr and Geely Galaxy
• Super Hybrid
  : Geely Galaxy L series, Lynk & Co EM-P series
• Alcohol-Hydrogen Electric
  : Differentiated technical route covering special scenarios

Overseas sales reached 420,000 units in 2025 [1]; Geely has entered 88 countries and regions with a total of over 1,200 outlets:

• BAMC factory in Egypt and Indonesia factory have been put into production
• The Brazil factory in cooperation with Renault is expected to be put into production in the second half of 2026
• Target to achieve 1 million units of overseas sales in 2027

---

Geely models are competitive in terms of intelligence, range, space configuration, etc. [1]:

• Xingyuan has sold over 40,000 units for 7 consecutive months
• Galaxy E5’s annual sales exceeded 160,000 units
• Zeekr 9X became the sales champion of large SUVs priced above RMB 500,000

Scale advantages from 3.025 million units of total sales in 2025:

• Reduced procurement costs
• Shared R&D costs
• Improved production efficiency

The overseas sales target of over 50% YoY growth [0] will effectively diversify the negative impact of domestic policy adjustments:

• European Market: Zeekr has entered more than 50 countries including the Netherlands and Sweden
• Emerging Markets: Bases in Brazil, Indonesia, Egypt, etc. have been put into production
• High-Value Output: Lynk & Co 08 EM-P is priced higher in Europe than in China

• Purchase tax guarantee subsidies (up to RMB 15,000 per vehicle) directly increase costs
• With expected NEV sales of 2.22 million units in 2026, subsidy costs may reach billions of RMB
• Intensified industry price wars put pressure on gross profit margins

The 2026 target sales volume of ICE vehicles is 1.23 million units, an 8% YoY decrease [0]:

• The traditional ICE vehicle market continues to shrink
• Need to balance R&D investment in ICE vehicles
• Dealer networks face transformation pressure

Increasing from 55.8% to 64.3% requires an additional 532,000 units of NEV sales [0]:

• Need to accelerate product launch rhythm
• Capacity expansion needs to keep pace
• Market competition will become more intense

• BYD’s NEV sales reached 4.272 million units in 2025, with a penetration rate of 92.8%
• Changan Auto’s 2026 target is 3.3 million units, with 1.4 million units being NEVs
• Price wars among new car-making forces continue, accelerating industry reshuffling

Strengths	Weaknesses
✓ Comprehensive coverage of diversified technical routes	✗ Relatively large ICE vehicle base
✓ Complete brand portfolio (Zeekr/Lynk & Co/Galaxy)	✗ Overseas profitability to be verified
✓ Robust financial indicators (P/E 10.3x)	✗ Increasing R&D investment pressure
✓ Leading intelligent technologies (Qianli Haohan, Flyme Auto)	✗ Higher technical threshold for PHEVs

Opportunities	Threats
✓ High growth in overseas markets	✗ Profit compression due to subsidy reduction
✓ Brand upgrading improves per-vehicle gross profit	✗ Intensified industry price wars
✓ Increased value of technology output	✗ Policy uncertainty
✓ Opportunities for industry integration and mergers & acquisitions	✗ Supply chain risks of chips and batteries

---

Ranking	Automaker	Total Sales (10,000 Units)	NEV Sales (10,000 Units)	NEV Penetration Rate
1	BYD	460.2	427.2	92.8%
2	SAIC Motor	450.7	164.3	36.4%
3	Geely Auto	302.5	168.8	55.8%
4	Changan Auto	291.3	110.9	38.1%
5	Chery Auto	280.0+	Not Disclosed	-

Automaker	Strategic Path	Characteristics
BYD	Full Electrification	Abandoned ICE vehicles, global leader with 92.8% penetration rate
Geely	Dual Track of ICE and NEV	Gradual transformation, stable ICE vehicle base
Changan	Multi-Brand NEV	Synergy between independent and joint ventures, 2026 target of 3.3 million units
Great Wall	Focus on Segmented Markets	Off-road + NEV, focus on markets below RMB 300,000
SAIC	Parallel Development of Joint Ventures and Independent Brands	NEV penetration rate of 36.4%, relatively lagging transformation

---

Based on the latest financial data [0]:

Indicator	Value	Industry Comparison
Price-to-Earnings Ratio (P/E)	10.3x	Below industry average, reasonable valuation
Price-to-Book Ratio (P/B)	1.76x	Within reasonable range
Return on Equity (ROE)	17.38%	Strong profitability
Net Profit Margin	5.41%	Stable level
Current Ratio	0.95	Close to 1, good liquidity

: Geely Auto has robust financial indicators, with valuation within a reasonable range, and has strong risk resistance and continuous investment capabilities.

---

, but the following key indicators need to be monitored:

1. NEV Sales Growth Rate
   : Whether it can maintain growth of over 30%
2. Overseas Sales Contribution
   : Whether it can achieve over 50% growth in 2026
3. Per-Vehicle Gross Profit Margin
   : Whether it can offset the impact of subsidy reduction
4. R&D Input-Output Ratio
   : Commercialization of intelligent technologies

• Short-Term (2026)
  : Neutral (Profit pressure due to policy reduction + price wars)
• Medium-Term (2027-2028)
  : Optimistic (Overseas volume growth + scale effect emerging)
• Long-Term (2029-2030)
  : Depends on globalization progress and technological leading advantages

Risk Type	Risk Description	Impact Level
Policy Risk	Further reduction or cancellation of subsidies	Medium-High
Market Risk	Continued price wars, declining profit margins	High
Competition Risk	Acceleration of competitors such as BYD and Changan Auto	High
Supply Chain Risk	Price fluctuations of chips and batteries	Medium
Overseas Risk	Geopolitics, trade barriers	Medium-High

• Over-expected growth in overseas sales in 2026
• Market performance of new models (e.g., Galaxy V900, new Zeekr models)
• Deepened cooperation with international automakers such as Renault
• Commercialization of intelligent technologies

---

Geely Auto’s “Dual Track of ICE and NEV” strategy is an important strategic choice to cope with industry changes and subsidy reduction.

—high growth of NEV business (90%), stable ICE vehicle base, and accelerated overseas layout.

Against the background of subsidy reduction in 2026, the

of this strategy are:

1. Risk Diversification
   : Avoid over-reliance on a single technical route
2. Cash Flow Support
   : ICE vehicle business provides stable funding sources
3. Global Hedging
   : Overseas markets reduce dependence on domestic policies
4. Brand Premium
   : Brand upgrading improves per-vehicle profitability

:

1. Aggressive NEV penetration target (+31.5% sales growth)
2. Profit margin compression due to subsidy reduction
3. Intensified industry competition

: Geely Auto’s “Dual Track of ICE and NEV” strategy has medium-to-short-term sustainability, but it is necessary to continuously track the progress of overseas market expansion, product competitiveness enhancement, and cost control capabilities. If the company can successfully achieve the target of 1 million units of overseas sales in 2026-2027 and maintain high growth of the NEV business, this strategy will show strong risk resistance and long-term development potential.

---

[0] Jinling API Data - Geely Auto Company Profile, Financial Analysis and Market Data

[1] CCTV.com - “Geely Auto’s 2025 Sales Exceed 3 Million Units, Cumulative Sales Cross 20 Million Units” (https://auto.cctv.com/2026/01/04/ARTIJydujW3ZiT6bATUpN5lL260104.shtml)

[2] Autohome - “11-Year NEV Subsidy Policy Reduced: How Automakers Respond” (https://chejiahao.autohome.com.cn/info/23680739)

[3] Huachuang Securities - “2026 Automotive Industry Investment Strategy Report” (https://pic-test-gjmetal-1324067834.cos.ap-shanghai.myqcloud.com/newsv2/52ec8d2263684f18982406db6606227a20251216194028.pdf)

[4] Sina Finance - “Price Wars Resume at the Start of the Year: Automakers Face a Tougher Year Starting from the Toughest First Quarter” (https://finance.sina.com.cn/jjxw/2026-01-13/doc-inhheixp9068117.shtml)

[5] Securities Times - “Five Consecutive Years of Rapid Growth! Geely Holding’s 2025 Total Sales Reach 4.116 Million Units” (https://www.stcn.com/article/detail/3582972.html)

[6] Autohome - “Geely Holding’s Annual Sales Exceed 4 Million Units for the First Time, NEV Sales Exceed 2.29 Million Units” (https://chejiahao.autohome.com.cn/info/24705001)

[7] The Paper - “2025 for the Top 5 Independent Automakers: Strategic Divergence Amid Growth” (https://m.thepaper.cn/newsDetail_forward_32348492)

[8] Orient Securities - “Achieved Relatively High Sales Growth in 2025, NEVs and Overseas Expansion Expected to Be Growth Drivers in 2026” (https://www.fxbaogao.com/detail/5212362)