ZEEKR goes public, but it seems the road ahead is not easy.

Recently, ZEEKR officially listed on the New York Stock Exchange under the ticker symbol "ZK", becoming the first Chinese automaker to go public in the U.S. this year, and another Chinese new energy vehicle company following Nio, XPeng, Li Auto, and Lotus.

As the "fastest IPO among new EV makers", ZEEKR took only 37 months from brand launch to listing, with its market value nearly catching up to XPeng. However, ZEEKR's valuation is still far below previous market estimates.

Meanwhile, many ZEEKR employees have complained on social media about the steep drop in their stock value, as the IPO valuation was nearly halved compared to the last funding round.

Whether it's autonomous driving R&D, marketing, or the dilemma of selling more but losing more, ZEEKR's post-IPO life is not easy.

01. Bleeding IPO: The More They Sell, The More They Lose

According to ZEEKR's official statement, the IPO proceeds will be used for three main purposes: about 45% for developing more advanced EV technologies and expanding the product lineup; about 45% for sales and marketing, as well as expanding ZEEKR's service and charging network; and about 10% for general corporate purposes.

Although ZEEKR's market value showed significant growth on its first trading day, this still cannot 掩盖 the fact that it was a "bleeding IPO".

Originally, ZEEKR planned to go public by the end of last year, but due to lower-than-expected valuation, it 一度 decided to postpone the IPO. Eventually, ZEEKR chose to 妥协， going public even with a valuation slashed by over 60%.

This shows one thing: ZEEKR couldn't wait to go public.

With the global 纯 EV industry's growth slowing and its own future uncertain, even capital markets are shifting their stance. Li Auto has fallen 50%, while Nio and XPeng have dropped nearly 90%. Going public ASAP seems the safest bet—though it has 得罪 ed equity-holding employees.

Losing money while selling more is a common issue for domestic new EV makers.

Financially, ZEEKR remains in the red.

From 2021 to 2023, ZEEKR's annual revenues were RMB 6.528 billion, 31.899 billion, and 51.673 billion, with losses of 4.514 billion, 7.655 billion, and 8.264 billion, respectively—accumulating over RMB 20 billion in losses over three years.

Difficulty turning a profit is the main challenge for all new EV makers.

Even pioneers like Nio and XPeng remain unprofitable, with losses widening. Li Auto is the exception. For these new players, brand building, new model development, delivery center expansion, and charging network rollout all require massive upfront investments.

However, Nio and XPeng have benefited from capital markets, amassing substantial cash reserves. By the end of 2023, their cash and equivalents stood at RMB 57.3 billion and 45.7 billion, respectively.

In contrast, ZEEKR has only RMB 3.26 billion. With over RMB 8 billion in R&D spending in 2023, even backed by Geely, its financial 压力 is immense. The IPO may ease this 压力， but profitability challenges loom post-listing.

In terms of deliveries, ZEEKR's revenue is growing. It delivered 71,941 vehicles in 2022, exceeding its annual target, and 118,685 in 2023, up 65% YoY.

Yet despite rising revenue, high R&D costs and fierce competition make profitability elusive.

A key reason is ZEEKR's niche and chaotic product lineup. It started with shooting brakes and only entered the mainstream family market with its fifth model, the 007. By April this year, cumulative deliveries exceeded 240,000—still lagging behind peers.

The IPO funds will significantly ease financial 压力, but post-listing, profitability 压力 follows. After all, ZEEKR must answer to investors and equity-holding employees.

02. Geely's 'Reset': Where Does ZEEKR Go From Here?

ZEEKR was born from Geely but must now "part ways" with Geely.

ZEEKR CEO An Conghui has set ambitious goals: "650,000 annual sales by 2025" and "top three global premium EV brands". Achieving both will be extremely challenging.

Last year, ZEEKR achieved a 15% gross margin solely due to parent company Geely's mature supply chain and manufacturing support.

Geely's SEA 浩瀚 architecture, a RMB 10 billion, five-year project, is ZEEKR's proudest achievement—an edge other new players lack.

Notably, ZEEKR spun off from Lynk & Co in March 2021, but its 控股股东， Zhejiang ZEEKR Intelligent Technology, is still under Geely 控股. Thus, ZEEKR's expenses and net losses have been funded by Geely's 输血.

To Geely, the new energy market is a huge 蛋糕.

Previously, Geely 孵化了 Geometry and Ruilan, but neither gained traction. Only ZEEKR succeeded. Geely's continuous 输血 into ZEEKR reflects its determination in the new energy market.

On one hand, Geely must ride the new energy wave, as traditional automakers' new energy brands are expanding rapidly. Geely, after earlier failures, lags behind. On the other hand, latecomers have already entered capital markets, leaving Geely's 布局 and business model somewhat outdated.

Under dual 压力， Geely chose to "reset".

In February 2023, Geely launched a new sub-brand—Galaxy, targeting the sub-RMB 200,000 mass market. With Geely's tech and 渠道， Galaxy quickly gained traction, with the E8, L6, and L7 selling well.

At the recent Beijing Auto Show, Galaxy unveiled its new full-size SUV, the Galaxy Starship.

This is great for Geely, but for ZEEKR, parental resources are finite.

With brands like Geometry, Galaxy, Lynk & Co, ZEEKR, Ruilan, and Jiyue (formerly Jidu), Geely's massive investments are denting its own profits. In its 2023 interim report, Geely cited a significant increase in distribution and sales expenses.

Geely attributed this to: ZEEKR's direct sales channel construction and operations.

Although Geely keeps 输血 ing ZEEKR, recent price cuts and strategic shifts suggest ZEEKR isn't doubling down on tech to solidify its premium image. Instead, it's lowering prices to compete in the RMB 200,000 segment.

This vision-contradicting strategy—sacrificing margins for volume—makes it hard for 资本 markets to stay bullish on ZEEKR.

References:

"Rich Kid" ZEEKR: After Glory, It Must Grow Up Alone—Lanjing 财经

IPO Dream Realized: Will 2024 Bring Double Joy for ZEEKR?—Jipai Daily

ZEEKR's "Humbled" IPO—Photon Planet

Xiaomi Slashed ZEEKR—Weiran Voice