Two days ago, Geely Automobile (Hong Kong Stock Code 00175) released its 2021 annual report, which showed that in 2021, Geely Automobile’s core financial indicators continued to improve, with the listed company’s revenue breaking through 100 billion again, achieving double-digit growth year-on-year; with an overall average unit income of 88,000 yuan, an increase of 9% year-on-year, as well as rapidly growing new business sectors, with revenues from technology services and licensing services increasing by 245% year-on-year; and the total cash reached 28 billion yuan, a new record for the company.
Since the fourth quarter of last year, the Chinese automotive industry has entered a long period of adjustment in the capital markets. Most automotive companies with sound fundamentals have seen their stock prices slump by 30% to 60%, while fundamentally weak stocks show a surge in prices. There is a joke among automotive insiders that people in the automotive industry dare not buy automotive stocks, because strong stocks usually fall, while weak stocks usually rise.
At the annual report conference two days ago, Gui Shengyue, CEO and executive director of Geely Automobile Holdings Limited, remarked that the stock price of the listed company is significantly undervalued compared with its actual value, and that Geely Automobile has long-term upward growth potential. He believes that the market performance will eventually return to the level matching the actual value of the company.
Of course, Gui’s statement is not intended to encourage anyone to buy Geely Automobile’s stock right now. Facing the Hong Kong Stock Exchange’s stringent regulations, he would not make such an impertinent error. However, it is clear that Geely Automobile is currently undervalued with a market capitalization of HK$100 billion.
In my opinion, the crucial reason for holding 00175 shares is not the current difference between the company’s actual value and market value, but rather what Gui Shengyue referred to in his remarks: Geely Automobile’s long-term sustainable upward growth potential.
Where does this sustained growth potential come from? Let me talk about it by using new energy vehicles as an example, although the market is rapidly changing.
At the crossroads of the third and fourth quarters of last year, Geely Automobile’s automotive research institute in Hangzhou Bay grandly released its 2025 strategy, and at this year’s annual report conference, the company’s leaders basically reaffirmed the strategy. In fact, even for Geely itself, the release of this strategy was later than expected. It can be inferred that this was originally a complete five-year plan.
However, for the entire industry, it is not too late. On the contrary, this strategic plan centered on intelligent electrification is the first one I have seen so far that reflects Geely’s comprehensive thinking on the entire process of the current automotive industry revolution, which has the most complete and valuable reference value for large car companies’ transformation.
Compared with Volkswagen’s resolute electrification and Toyota’s impulsive introduction of dozens of pure electric models, I think Geely’s 2025 strategy has several features that are more worthy of detailed analysis.
Firstly, it will never give up the pursuit of diversified new energy routes due to temporary policies and the high-decibel interference of the market. This is mainly reflected in the Oil-Electric Hybrid and Super-Electric Hybrid products that Geely will begin to concentrate on launching this year. By 2022, we will see as many as 10 new energy products launched.
Hybrid vehicles have always been included in the array of new energy vehicles listed by the Ministry of Industry and Information Technology, but except for some local support for local enterprises, hybrids have never received any reasonable subsidies. With the continuous decline in new energy subsidies, many places have also gradually cancelled support for plug-in hybrids.
However, Geely has always believed that hybrids are an important intermediate link that cannot be bypassed and should not be bypassed in the trajectory of automotive energy conservation development aimed at zero emissions, which is the real market demand.
For radical consumers, pure electric is certainly an acceptable choice. However, if the new energy sector wants to smoothly complete the revolution of traditional fuel vehicles, providing multi-level choices instead of an either-or choice is the inevitable path.
However, in a state where Toyota is already very strong and Europe and America have basically given up, Geely believes that it must make autonomous hybrid products that have leading advantages in energy efficiency, undisturbed electrification education, intelligence, and many other dimensions, in order to have a real presence and make this type of product into the pillar product for the future.
Therefore, we see that Geely has achieved the world’s highest hybrid vehicle thermal efficiency level of 43.32%, which brings more than 40% fuel economy, and at the same time, the acceleration and handling performance of the vehicle also achieve breakthroughs.We will soon see plug-in hybrid models with pure electric range surpassing 100 km and high-performance versions exceeding 200 km. These vehicles will be available in the Geely Emperor and Lynk & Co flagship models with prices over 400,000 RMB before the end of this year. This means that you will be choosing a car with no range anxiety or power recovery concerns, while still being able to drive in pure electric mode for most of the time. This is the best choice for “silent majority” consumers to learn about electrification.
At the same time, Geely has a distinctive feature in its electrification process, which is to never neglect the core expectations of its consumers, such as safety and intelligence, regardless of whether a certain product represents cutting-edge new energy technology. For example, even gasoline-powered products like the Geely Star Series aim to subvert the same level in terms of intelligence, which is the key to its rapid market share expansion as a high-end series under Geely. The Geely hybrid series and “Super Hybrid” series are all configured according to the intelligent architecture of Geely 4.0. Among the hybrid models, the Geely KX11’s hybrid engine is the first to achieve FOTA (firmware update over the air). These vehicles are also equipped with adaptive, self-learning energy intelligent management capabilities.
It is worth mentioning that the Geely Star Series, after several market-shaking products, has formed a lighthouse effect for the Geely brand. For the first time, a Chinese brand has achieved a breakthrough in breaking the price ceiling by relying on the existing brand itself rather than creating a new brand through the Geely Star Series. This lighthouse effect will be even more prominent in Geely’s super hybrid and pure electric era. The success of the Geely Star Series has opened up a broad space for the development of the Geely brand, ending the inefficient development framework of launching multiple products in a narrow price space during the Geely 3.0 era. This is also fundamental to the significant increase in Geely’s single-car revenue shown in this year’s financial report, and will inevitably enhance the market image and capacity of the Geely brand.
In Geely’s new energy era, with the support of pure electric technology under the Super Hybrid and vast platforms, the space above the Geely Star Series has been expanded to the 300,000 RMB level. As the most extensive and popular car brand under Geely, the upward path of the Geely brand has been paved by the Geely Star Series. In my New Year’s Day article for 2022, I predicted that the energy iteration from oil to electricity, from all perspectives, cannot be a smooth sailing, and there may be repeated links including national policies, diplomacy, and even industry participants’ internal struggles. The direction of the electric vehicle market at the beginning of the year and various conditions of the industry chain have also confirmed this judgment.Including plug-in hybrid vehicles, hybrid products will undertake the most traditional fuel vehicle users’ transformation in the first stage of electrification, which is the most logical market path.
The premise of this statement is based on the answer provided by Geely’s Lynk & Co hybrid vehicle: companies must provide products that meet market expectations in terms of intelligence, energy efficiency, and automobile performance, rather than simply producing hybrid cars. Just like many companies say electrification, it seems that as long as oil is changed to electricity, the transformation is completed. Such a product logic is not in line with the requirements of the times, and transformation and upgrading are difficult to achieve.
When I talked about the future and ideals with almost all scale car companies going through transformation, the first sentence is always that we must base ourselves on our own advantages. What is a foothold in our own advantages? Geely’s Lynk & Co hybrid vehicle is.
Persisting in diversified new energy strategies is a comprehensive review of new energy path diversity and a firm and loyal commitment to the market demand-determined enterprise direction mindset. The transformation of many industries tells us that for large companies facing transformation, only loyalty to market demand can achieve ultimate victory.
In fact, in 2022, we saw a group of independent and joint venture brands making efforts in the hybrid and plug-in hybrid fields, and the previously clamorous electrification leap-forward path will return to the right path starting from this year. Among these products, Geely’s Lynk & Co hybrid vehicle group is undoubtedly the market leader.
Secondly, Geely will not change its pace because of market fluctuations, nor will it give up its principles. Geely’s principle, which is fundamental for the company as China’s first privately-owned automaker to be able to develop to this day, is that it always pursues the best cars that are most loved and used in spirit. In action, it is always to put the best technology that has been mastered into mass production at the fastest speed.
Putting the best technology that has been mastered into mass production at the fastest speed may still be considered slow in the eyes of some people. Because the more easily acceptable logic is to seize the opportunity no matter what and rush in. For example, Geely often faces criticism in the past few years that the Blue Geely Action has not been realized as scheduled, especially in the field of pure electric vehicles, where development is lagging.
However, for Geely, it must wait for its strongest architecture in the field of pure electric vehicles before making a large-scale effort, even though it has been preparing for eight years for this, longer than most of the new forces. Geely’s philosophy does not accept making a batch of conforming electric cars first, like many companies. Geely’s position is the representative enterprise of China’s automobile industry. Therefore, facing the new era, what Geely needs is products that represent the highest level of China’s automobile industry.Last year, Geely saw a significant increase in its pure electric brand Geometry, as well as the launch and delivery of its pure electric high-end brand, JEEHOR. JEEHOR is Geely’s new energy bomb, which is both the result of the vast architecture and GEEA 2.0 electronic and electrical architecture, and also the choice for the company’s transformation track.
Although JEEHOR had some problems during the initial delivery process, we see that the brand can quickly get rid of the shackles of starting and enter a fast-developing track from two aspects. Firstly, all the problems that occurred were caused by the temporary chaos of a new type of car company that was inexperienced in the early stages. Secondly, the core link of JEEHOR’s products did not have any issues, and its product strength was significantly outstanding in the same price range.
After a brief stagger, JEEHOR quickly found its most comfortable rhythm. The production of new technologies and new production lines in the initial stages of an automotive company inevitably has some problems, but Geely has never been stuck in key technologies. This is the result of Geely’s demanding perfection in technology before production in the evolution of the company.
Therefore, at the press conference the day before yesterday, An Conghui, Chairman of Geely Automobile Group and CEO of JEEHOR Smart Technology, emphasized with full confidence that the goal of JEEHOR to achieve an annual production and sales of 650,000 vehicles in 2025 remains unchanged. This is the confidence brought by product confidence.
For Geely, the new energy it needs is something that can be improved as soon as it is put into action and can represent the future product direction of products and solutions. Market expectations and product improvements are the fundamental factors in Geely’s decision-making for new energy nodes, rather than the noise of capital and opportunistic ideas.
In addition, after the significant growth of Geely’s popular electric vehicle product, Geometry, in 2021, its products have been adjusted to a channel that is suitable for sales, and Geely will open its G network and L network in 2022 to empower it with increased sales.
Furthermore, Geely has previously expressed that every brand within Geely Automobile is a participant in the intelligent electrification era. Geely and Lynk & Co., as the core brands of Geely Automobile, will definitely not stop at hybrid electric vehicles, but will follow the trend of clean energy. This means that Geely and Lynk & Co. will each launch their own intelligent electrification products according to their own brand characteristics and development needs.
In my opinion, it is better for Geely and Lynk & Co. to adopt pure electric power sooner rather than later. The success of Lynk & Co.’s unique brand positioning has already proven that the power of individualization is much greater than before when users purchase automotive products. Today, Geely and Lynk & Co. have completely achieved a situation where partial price ranges overlap without mutual competition, but rather an ideal situation where 1 + 1 is greater than 2.
Therefore, in the field of intelligent electric vehicles, which is more subdivided and has more limitless design space, the three distinctive brands of JEEHOR, Lynk & Co., and Geely can each develop pure electric intelligent products simultaneously based on their respective brand characteristics and development needs. This is also the powerful customization ability that the vast platform can undertake.Therefore, with Geely’s good preparation in both architecture and technology, the rapid implementation of Geely EV and Lynk & Co EV will have a completely positive effect on both brands and Geely’s overall layout of new energy products. This point should learn from Lynk & Co’s initial experience. Originally, Geely followed traditional thinking and was afraid of conflicts with Lynk & Co, resulting in a certain degree of delay in Geely’s upward pace, leading to Geely’s low-efficiency repeated production of cars in the 100,000-150,000 yuan section for several years, and Lynk & Co did not benefit from this protection until the launch of the Lynk & Co 03, when Lynk & Co truly found its own positioning.
With the current great opportunity of pure EVs, Geely cannot ignore such experiences. Since it is ready, there is no hesitation. With the brand power of Geely and Lynk & Co at present, as well as the high recognition of Geely EVs driven by Zeekr, the three brands will inevitably form a synergistic energy that promotes each other. This is the unique advantage of the combination of Geely’s architecture advantage and brand advantage, which is not currently possessed by other companies.
Thirdly, Geely’s complete, clear and rational review of the entire process of the transformation to new energy industry.
In the 2025 strategy, the release of the L Ray powertrain brand, the entire industry chain’s clean energy transition and intelligent technology full-stack independent research and development reflect this point.
The connotation of L Ray Power is very rich, which represents Geely’s judgment on the diverse needs of efficient powertrain products in the future market, and also expresses Geely’s commitment to provide the highest quality products to users who choose various energy methods.
We can see that many traditional companies have actually adopted a rough transformation path in the process of electrification. Some international big companies have also weakened or even abandoned the continuous investment in technologies and products other than pure EVs. Of course, when making these choices, the wording of big companies is full of passion and dreams, but this is not the attitude that responsible big companies should choose for users.
Geely is different. Based on the leading architecture advantage established over the past decade, Geely chooses the strategy of synchronously researching and developing, optimizing, and promoting in markets such as fuel, hybrid, and pure EVs that will still be in demand in the long term from Geely 3.0 era to today’s 4.0 era. Geely strives to provide the most excellent products in the same level in all forms of power, and ensures that all forms of power continue to maintain their efficient development capabilities.
This excellent definition is not limited to powertrains, but also reflects the synchronous response to the needs of the times. Geely’s intelligent applications, from high-end products to the shortest cycle from full series configuration, are Geely’s response to the demands of the times in product thinking.
# Geely Holding Group CEO, Vice Chairman and Executive Director of Geely Automobile Holdings Ltd, Li Donghui, mentioned at the annual report release conference that Geely made significant progress in technology and licensing services in 2021. This is a clear return on Geely’s commitment to providing high-quality and sustainable products to all customers.
As many companies abandon their internal combustion engine product technology strategies, Geely’s technology and licensing services business sectors are expected to expand rapidly in the next ten to twenty years. Geely Automotive Group’s Senior Vice President and Director of Geely Powertrain Research Institute, Wang Ruiping, said that Geely’s technology supply is global and not an unrealistic idea.
Self-developed full-stack intelligent technology is the core of the Intelligent 2025 strategy. This is also a soulful answer to the automotive industry revolution that Geely faces. So far, few other automotive companies have made such a clear response. This clarity is not only in words but also in actions.
For example, Geely’s self-developed connotation clearly includes key aspects such as top-level chip design, big data analysis and application, and satellite network coverage. To put it plainly, when the automotive and even travel industries enter the intelligent industrial stage, Geely has no intention of delivering the core issues of deciding the industry direction to others in the future, and Geely believes that intelligent autonomy is the key growth point of the industry in the future.
Although many internet and communication technology companies regard their entry into the automotive industry as a downgrade in order to boost their morale, the core idea is that they are clearly superior to automotive companies in many aspects of technology, big data, and organizational structure. Yes, they will encounter many choices to hand over their intelligent technology to car companies, but they will also face car companies like Geely to challenge their arrogance.
Where does Geely’s confidence in realizing self-developed full-stack intelligence come from? In fact, it can be summed up in eight words, unbounded fusion and self-renewal.
Let’s step out of the scope of Geely automobiles and examine the entire Geely. Over the past several years, Geely Holding Group and Geely Technology Group, through mergers and acquisitions, investments, technology cooperation, co-creation, and self-development, have adopted a rare open and inclusive global corporate attitude, accumulating a large number of cutting-edge technology reserves in various fields such as technology, communication technology, finance, and big data, which are pushing forward and will continue to support Geely automobiles. Looking back, you can see that all the investment and financing projects of Geely are for the sake of supporting the main body of Geely automobiles.
The core of self-renewal is the transformation and stimulation of Geely’s internal culture and human resources.# The Spring Festival of 2021
An Conghui declared that Geely Automotive does not set limits on talent, breaking the traditional corporate framework and supporting the talents needed by Geely for science and technology. This Spring Festival, Geely Automotive Group CEO An Conghui called on all Geely employees to “let every Geely person shine” based on this. It is impossible for every person in a company to be a technology talent, but every person in a technology company should shine in the spirit of a technology company. This is the deepest innovation of Geely to itself, and it is also a self-innovation that many large companies are difficult to achieve.
According to An Conghui, as long as they do a good job, there is no gap that cannot be filled and no core technology that cannot be mastered, with two or three rounds of personnel accumulation.
Answers to these key issues reflect Geely’s complete understanding of the industry evolution path. It is essential to put this understanding into action through leading and sustainable core technological strength and the company’s ability to self-evolve based on consensus building.
Geely reviews product new energy, enterprise technology, and industrial revolution perspectives, as well as users’ emotional expectations and actual needs, and has developed the 2025 strategy, which is Geely’s intelligent electrification strategy.
In summary, I believe this is the most strategic analysis I have seen from a large-scale car company. This is also why I think 00175 is worth investing in mid-to-long term value, showcasing Geely’s strategic determination, matched with its strong execution.
As Geely Automotive Group CEO, An Conghui said, “Since the beginning of Geely’s creation, our corporate strategy has never deviated. The rise and fall of the company is nothing more than how well we execute it. Since the Ningbo Declaration in 2007, Geely has found synchronization between execution and strategy and has persisted until today.”
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email email@example.com.