Author: Cai Jialun

Introduction: Behind “Weixiaoli” entering the automobile market not only promotes the further development of the new energy automobile market but also triggers a series of changes. As a brand-new new energy automobile brand under Geely, Zeekr has been highly valued since its establishment for its ultra-high appearance value and Geely’s guarantee of reputation. However, after being highly praised, Zeekr has been questioned because of a series of problems. Under the attention of all parties, can Zeekr break the deadlock and become a concern for everyone?

Two months ago, a group of consumers were attracted by a press conference, and “blindly” paid a deposit of 2,000-5,000 yuan for Zeekr without a mass-produced car. According to a friend who “blindly” booked Zeekr, she didn’t think too much when she paid the deposit. On the one hand, because Zeekr is a sub-brand of Geely, and on the other hand, the deposit amount is not large, plus the product is also very good.

As the leader of independent brands, Geely has been the sales champion for many consecutive years. Why does Geely still want to create Zeekr when it leads many independent brands?

Flying against the wind

On March 23, 2021, Zeekr Intelligent Technology was officially established, jointly invested by Geely Automobile and Geely Holding Group, with Geely Automobile holding 51% of the shares and Geely Holding Group holding 49% of the shares. The 51% share held by Geely Automobile includes employee follow-up platforms and user equity platforms. In the words of some industry insiders, the establishment of Zeekr Automobile is to differentiate from the existing traditional car company model and adopt a user co-construction model, with the aim of better getting rid of the limitations of traditional car companies and having greater room for development.

If we must use one sentence to briefly summarize it, it is “to break through the class solidification of existing brands”!

What exactly is class solidification? Let’s take the most familiar example-Da Zhong Passat. Da Zhong’s inherent label is “popular” and “economic”, and the entire brand characteristics have nothing to do with “luxury” and so on. In the case of severe brand class solidification, Volkswagen chose to spend a huge price to create a luxury car product-Da Zhong Passat. It must be admitted that the product power of the Passat is indeed not inferior to the Mercedes-Benz S-Class and BMW 7 Series, but for consumers, no matter how luxurious this car product is, it is still a Volkswagen.The defeat of Volkswagen Passat is well-known to everyone, and GAC Group also understands this truth. GAC Group’s “original brand” image is too traditional. For Volkswagen, GAC Group is an affordable and practical fuel vehicle brand with unique designs. In other words, breaking away from the original brand’s solidified image, it is necessary to start from scratch, shape it with a brand new image and concept, and let consumers accept a more advanced brand. Only then can brands inject more advantageous technologies into products and obtain higher brand premiums.

Therefore, GAC Group has launched several attacks towards brand high-end, including English Cars (Yinglun) and Lynk & Co. Although having many children can lead to bickering, all of GAC Group’s sub-brands that aim to impact the high-end market, only Lynk & Co has successfully established itself in the market. The three brands of GAC Group, Lynk & Co, and Volvo respectively cover the low, medium, and high-end fuel car markets.

Looking at the layout of the three major brands, GAC Group’s advantages are still in the field of fuel cars. However, in the field of new energy vehicles, GAC Group still does not have a strong enough brand to support the development. In order to accelerate the layout of the new energy vehicle market, GAC Group launched Geometry in Singapore on April 11th, 2019. However, the expected high sales of Geometry did not change the “weakness” problem of GAC Group in the field of new energy vehicles.

According to data, as of November 2020, the cumulative sales of Geometry Automotive was only 8,911 units. Compared with the same period in 2019, which was 11,592 units, it fell sharply by 26.8% YoY and was going against the trend of the overall volume increase of the new energy vehicle market in 2020.

In addition to the poor sales performance of Geometry Automotive, the overall performance of GAC Group’s “foreign aid” – Polestar, is also similar to playing house, and it is not at the developing speed that a new energy brand should have. The sales performance of Polestar 1 is not good, which is understandable as Polestar 1 and Tesla Roadster are both used as brand endorsements.# Polestar’s key issue – Polestar 2

As a new energy vehicle targeting the civil market, Polestar 2, built on the CMA platform jointly developed by Geely and Volvo, with inherent technical flaws, has made almost every mistake it could possibly make. This has resulted in a range of weaknesses, including lower range than the Tesla Model 3 Standard Range, amongst others. Polestar 2 was actually launched a long time ago, but due to delays in bringing the product to market, it missed out on the opportunity for growth.

Under multiple pressures – from class solidification to product shortages, Geely realized that it needed a highly pure, technically sound, highly valued brand capable of absorbing more brand premiums- and even Lynk & Co couldn’t fit the bill. This is where Geometry Automotive, positioning itself as a high-end new energy vehicle brand, makes its entrance.
Benefiting from Tesla’s successful educational endeavors, consumers can now quickly accept a brand new energy vehicle brand, making Geometry Automotive a perfect fit for this market.

Fully committed to being a pure electric vehicle brand and avoiding confrontations with traditional fuel brands’ new energy models, Geometry Automotive continues to have greater plasticity, and more development time.

Growing Pains

To successfully establish the high-end new energy vehicle brand image of Geometry Automotive, Geely founder Li Shufu decided to be personally involved. This highlights Geely’s level of importance placed upon the brand. However, recently exposed negative news, or rather, user-generated issues that don’t fit the model, have put Geometry Automotive’s high-end brand image in jeopardy.

As Geometry Automotive’s first product, Geometry 001 is built on the Geely SEA Haomao architecture. In the promotional materials for the Haomao architecture, Geely heavily promoted the support for an 800V high-voltage fast charge, which could charge the car in 5 minutes and achieve a range of 120 km. As the first model on the Haomao architecture, not only did the high regard Geely has for it play a significant role, even though the manufacturer didn’t specify whether Geometry 001 was 400V or 800V, consumers naturally assumed that it was 800V.

However, after two months of waiting, owners received the disappointing news that the Geometry 001 only supports 400V high-voltage fast charging. When asked about providing only 400V high-voltage fast charge for Geometry 001, Geometry Automotive answered on their official WeChat account that 800V technology is not yet mature, and 400V is adequate. However, car owners don’t agree with that opinion.

If the issue of high-voltage fast charging is a wishful thinking for car owners, then the sudden price increase of Zeekr Electric Cars is undoubtedly a heavy blow to them. According to Zeekr Electric Cars CEO An Conghui, the order volume far exceeded expectations. Starting from June 15th, Zeekr Electric Cars stopped accepting small orders and announced delivery rules: for customers who placed the large orders before June 15th, delivery will begin in October 2021 in the order of deposit payments, with some configurations possibly being delivered in January. For large order customers after June 15th, delivery will begin in order of deposit payments after the Spring Festival in 2022. All large order customers (including those on July 31st) before July 31st can still enjoy the rights of 5,000 yuan off for every 20,000 yuan spent.

Subsequently, Zeekr Electric Cars adjusted the price of Zeekr 001 to 284,000 yuan next year without subsidies. Although the subsidy for new energy vehicles will indeed decrease by 30% next year, Zeekr Electric Cars could not deliver the subsidy to customers who ordered cars this year due to insufficient production capacity. This “mistake” should not be borne by customers. Many users have expressed dissatisfaction, believing that Zeekr Electric Cars is exploiting consumers.

In addition to the above problems, the last straw that broke the camel’s back for Zeekr Electric Cars was the “downgraded configuration.” At the press conference, Zeekr Electric Cars released three versions: ME for low-end, WE for mid-range, and YOU for high-end. At the conference, both WE and YOU versions did not mention the difference in privacy glass, and consumers assumed that privacy glass was standard across the board. However, it was discovered afterwards that the WE version did not come with privacy glass, and customers had to pay an additional 5,000 yuan to install it. In addition, electric sunroofs were not standard across the board and cost nearly 10,000 yuan to install. Zeekr Electric Cars explained that it was added based on customer feedback, but customers who had made large deposits said, “The Zeekr center console at the Shanghai Auto Show already had this feature, but it was unable to be displayed in the prototype. I definitely don’t believe that it was added later by customer request.”

Although Zeekr Electric Cars has made clear statements regarding one after another controversy, before An Conghui’s official “apology letter,” Zeekr Electric Cars acted as if “I’ll tell you after fixing the problem,” very passive, and even under pressure to quell public anger. In order to solve customer problems, Zeekr Electric Cars also conducted a Zeekr User Co-creation Communication Meeting to address customer car purchase issues. To some extent, real-time feedback from customers and other issues may be one of the difficulties in the transformation of traditional automakers into customer-oriented companies, which cannot be avoided by new brands created by traditional automakers such as Zeekr Electric Cars. Overall, Zeekr Electric Cars has a long road ahead, and only in-depth reforms can make it a truly high-end new energy brand with potential beyond Tesla.After the problems with Xpeng were exposed, netizens found out on Tianyancha that the shareholders of Xpeng have changed. Geely Automobile Group Co., Ltd. has withdrawn from the shareholders and Shanghai Huapu Guorun Automobile Co., Ltd. has become a new shareholder. Shanghai Huapu Guorun Automobile Co., Ltd. is a joint venture controlled by Zhejiang Geely Holding Group Co., Ltd. (90%) and Zhejiang Huapu Asset Management Co., Ltd. (10%).

According to relevant information, Shanghai Huapu Guorun Automobile Co., Ltd. is a joint venture controlled by Zhejiang Geely Holding Group Co., Ltd. (90%) and Zhejiang Huapu Asset Management Co., Ltd. (10%). The legal representative of Shanghai Huapu Guorun Automobile Co., Ltd. is An Conghui, who serves as the President of Zhejiang Geely Holding Group, the Chairman of Geely Automobile Group, the CEO of Xpeng, and other positions.

In fact, this change in shareholders did not really cause Xpeng to break away from its relationship with Geely Holding, but it broke away from its relationship with Geely Automobile, which is the subsidiary of Geely Holding. As we can see from this hierarchical order, Xpeng used to be the subsidiary of Geely Automobile, which is the subsidiary of Geely Holding.

After the change of shareholders, Xpeng has become the subsidiary of Shanghai Huapu Guorun Automobile Co., Ltd. instead of Geely Automobile, which still makes it the grandchild company of Geely Holding. However, its internal level has been promoted, and Xpeng and Geely Automobile have become parallel brands under Geely Holding. Perhaps many people think that Geely Automobile’s withdrawal from Xpeng’s shareholder list is to protect itself. In fact, Geely Automobile’s withdrawal is more for the sake of Xpeng’s development.

From the market’s point of view, since emerging electric vehicle companies appeared, the capital market has shown little interest in traditional car companies. In contrast, new energy vehicle brands with “smart electric vehicles” have been favored by the capital market. Looking at Geely Automobile’s withdrawal from the shareholder list when it was about to be listed on the science and technology innovation board last month, it is highly likely that it is to make way for Xpeng’s development. After all, if Xpeng can be listed independently now, and even have “triple listing” like BeiGene, its development potential is not inferior to Tesla.

Of course, as the first brand of “Sea Haohan Architecture”, Xpeng’s products will have stronger development potential with the support of “Sea Haohan Architecture.”

The key factor that attracted countless fans to Tesla is that its products have software upgradability- through periodic network pushes of upgrade packages for vehicles, vehicles gain more intelligent functions and are given the ability to learn like humans. Data shows that Tesla has conducted hundreds of OTA upgrades in the past eight years, making the vehicles undergo hundreds of functional improvements.

Compared to Tesla, the SEA Haohan architecture gives Jidu Auto more than just a software upgradable capability. Rather, it incorporates a plug-and-play hardware feature onto the software evolution path. From a hardware perspective, the SEA Haohan architecture is more like a “motherboard” that allows for quick insertion of required accessories as needed. As an example, accessories for the power system undoubtedly refer to the diverse layout structures of electric motors, battery packs, and inverters. Thanks to the characteristics of the SEA Haohan architecture, Jidu Auto’s products not only have software evolution capabilities, but their hardware evolution will also cover the entire lifecycle, which allows for better observation of intelligent definition.

In addition to the basic infrastructure, at the level of autonomous driving, vehicles built on the SEA Haohan platform architecture achieved Level 3 autonomous driving in 2021 and will achieve Level 4 autonomous driving by 2025. Compared to Tesla’s currently tested FSD beta pure visual algorithm, Level 4 technology route, Jidu Auto’s SEA Haohan platform for autonomous driving provides significantly higher safety, whose functional modules have achieved double-redundancy and the highest functional safety level certification of ISO 26262 ASIL D grade. With the SEA Haohan architecture, Jidu Auto’s current or future products will have higher potential for evolution.

The SEA Haohan architecture will also bring great benefits to Jidu Auto by shortening product development cycles and accelerating product layout. The SEA Haohan supports a range of wheelbases from 1800 mm to 3300 mm, and supports all vehicle types of various sizes and positions, including from A-class to E-class, from sedan to SUV to MPV, etc. By breaking down and making all modules fully interchangeable in the design stage, Jidu Auto can improve product layout in a shorter time and implement precise multi-point product entry into the market, bringing greater development potential. “Everything is ready, except for the east wind.” It can be predicted that when Jidu Auto enters the capital market, it will undoubtedly attract the attention of major investment institutions and bring strong “east wind” for its development.

Electrodynamic Momentum Speaks

Traditional automakers do not lack strength, and as a business card of China’s automobile industry, Geely has already begun to catch up with joint ventures in the field of fuel vehicles. However, in the era of electric vehicles, the competition among automakers is no longer limited to manufacturing processes, and key factors include autonomous driving, intelligent interconnection, promotion and propaganda, and user operation. However, Jidu Auto’s recent issues have just exposed this series of shortcomings.Li Shufu stated at the beginning of 2021 in a construction meeting that “This 100-year automotive revolution, full of opportunities and challenges, is a new marathon race with no end but only a beginning. There are no methods, only directions.” The general interpretation of the positioning of CHEJU Private Vehicle is that it is an evolution of Geely from a traditional automotive enterprise to a user-oriented enterprise—an evolution of enterprise thinking. The direction is absolutely correct, and the resistance ahead is precisely the driving force for advancement.

This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.