The rise of Tesla in China has inspired domestic rivals to do the same: target premium sales and move overseas. Zeekr has raised prices and may reportedly list in the US. Strong sales provide plenty of road ahead for the upmarket electric car brand of Chinese automaker Geely.
Cynics may snark that “Chinese luxury car” is a contradiction in terms, like “organised chaos”. But critics said the same of top-end Japanese vehicles before Toyota launched its Lexus sub-brand.
If Zeekr raises some $1bn in the US it would overturn widespread expectations of a Hong Kong listing. Zeekr would be the first large Chinese company to list in the US since Didi’s debut last year, which ended in an ignominious delisting.
Zeekr is a two-year-old brand with just one model on the market. It made a loss in the first half. The listing would value the business at more than $10bn. This would represent an enterprise value multiple of about 8 times forward sales, 60 per cent more than Tesla.
A strong outlook would justify the premium. Even Geely, which owns around 60 per cent of Zeekr, cannot have anticipated the huge popularity of its vehicles. Zeekr sold out all available production for this year in September. October orders for the Zeekr 001 model were up 50-fold from a year earlier. The group has support from investors such as Intel Capital.
Premium branding and higher prices work well in China. The cost of a Zeekr 001 starts at $41,000, more than the Tesla Model Y. Local sales growth for Lexus has outpaced Toyota’s other models for years. Electric cars are hotter than ever and Geely will benefit.
Zeekr should also do well in Russia. Sales of Chinese cars doubled there in November as US and European brands left the market. The business plans to launch in Europe next year, and then North America.
Zeekr does not need to make a big dent in Tesla’s sales to change perceptions about Chinese luxury cars and attract investors.
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