ZEEKR Makes a Splash on NYSE with Remarkable IPO

After three years of growth, ZEEKR has finally reached a significant milestone that it has long been aching for.

On the 10th of May, ZEEKR made its official debut on the U.S. stock market, trading under the ticker symbol ‘ZK’ on the New York Stock Exchange.

In this initial public offering, ZEEKR issued 2,100 shares of American depositary shares, each at a price of $21. This is the highest price set in its prospectus, thus raising a total of $441 million, which was oversubscribed by more than five times.

Based on its initial price of $21 per share, the market valuation of ZEEKR is approximately $5.2 billion.

With its successful listing on NYSE, ZEEKR has officially become the fastest Chinese EV startup to achieve IPO, and with the status of a public company, formally entered a new stage of development.

Taking Advantage of the Trend

Following the commencement of its trading on NYSE, ZEEKR now stands as the fourth Chinese EV startup listed on the US stock market, and is also the fastest amongst all EV makers to go public.

Looking at the bigger picture, it’s an incontrovertible fact that ZEEKR has actually missed the optimal window for listing on the US stock market.

On one hand, as gray swan and black swan events become increasingly frequent in recent years, and the global economy displays signs of slowing growth and localized instability, the US stock market is ensnared by increasing risks.

On the other hand, with the newfound sobriety in capital markets towards the new energy sector due to challenges related to R&D, mass production, delivery, etc., investors have once again adopted a cool-headed and cautious stance.

Nonetheless, despite missing out on the optimal timing, the listing at this juncture is a natural and prudent choice for ZEEKR based on its current standing.

Standing Out with a Unique Positioning

Let’s turn back the clock to April 2021, when the ZEEKR brand and its debut model, the ZEEKR 001, were officially unveiled.

At the time, ZEEKR stood out as a niche brand due to the 001’s focus on performance and its positioning as an all-electric crossover vehicle.

Yet it was precisely this niche appeal of ZEEKR that struck a chord with the masses with the ZEEKR 001, allowing it to quickly penetrate into the mainstream electric vehicle market. The key to ZEEKR’s success lies in the bold and precise category innovations of the ZEEKR 001.

The ZEEKR 001 centralizes its product power on control. Thanks to its inherent electric acceleration capability, low center of gravity and 50/50 weight distribution, this all-electric vehicle features classic product design tailored for control.

In the meantime, as a new brand untested by the market, ZEEKR took a financial risk by historically equipping a 300,000-yuan vehicle -the ZEEKR 001- with air suspension.

Another key innovation lies in the vehicle’s design. Under the helm of automotive industry veteran and ZEEKR CEO An Conghui, ZEEKR broke free from the dependence on either SUV or sedan configurations, choosing instead a unique and highly original crossover design for the ZEEKR 001.

With this, the ZEEKR 001 not only escapes the stark homogeneity of design typical for electric vehicles, it also amplifies the rear space, maintaining its maneuverability while incorporating some domestic attributes —– Though it might seem like a niche product, the ZEEKR 001 actually targets the mass market.

If one were to summarize the ZEEKR 001 in a phrase, then An Conghui’s, ‘We don’t do boring electric vehicles”, couldn’t be more apt. Moreover, this ‘non-boring smart electric vehicle’ has yielded significant market returns for ZEEKR.

In October 2021, the ZEEKR 001 began to hit the roads. In just four months, the ZEEKR 001 achieved a breakthrough from zero to 10,000 deliveries; and in one year, monthly sales exceeded 10,000; in 2022 – the first full year of ZEEKR 001 deliveries – ZEEKR sold more than 70,000 with just one model.

Unfortunately, ZEEKR didn’t have a smooth sail. Amidst enthusiastic market feedback, a weakness in smart technology sparked a crisis for ZEEKR.

After the ZEEKR 001 was delivered, an increasing number of customers complained about technical issues with the vehicle, severely damaging the brand’s image and causing a rapid downturn in public opinion.

To counteract this negative perception, on July 11th, 2022, ZEEKR made a significant decision at its Evolution Day – to replace the Qualcomm 820A chip in all vehicles with the Qualcomm Snapdragon 8155 chip, free of charge.

While this undoubtedly levied a large financial cost on ZEEKR, the decision paid off as it lead to a brisk recovery in its reputation. More importantly, it significantly increased the potential and recognition of the ZEEKR brand.

After establishing a solid market foundation for its product and brand, ZEEKR introduced several new models, including the ZEEKR 009, ZEEKR X, and ZEEKR 001 FR. The offerings enhance brand value rather than sales, since they don’t target the mainstream market users. The baton for driving ZEEKR sales was truly passed to the current ZEEKR 007 and the all-new ZEEKR 001.

When the ZEEKR 007 and all-new ZEEKR 001 were launched, entering into 2024, the price war for new energy vehicles had become fierce. In response, manufacturers were gritting their teeth, willing to sell cars at a loss for market share.

Faced with such a stringent market environment, the ZEEKR 007 and all-new ZEEKR 001 barely left any room for further price drops in their pricing strategy in order to ensure an immediate volume upon launch, and while continuing to emphasize the product’s control features, it promised users the level of comfort and intelligent configuration comparable to the highest standard in its class.The performances of ZEEKR 007 and the all-new ZEEKR 001 have not disappointed, with the former breaking through 10,000 orders in just over half a month after hitting the market, and the latter breaking through 30,000 in its first month on the market.

Despite the subsequent launch of the XiaoMi SU7 stealing some orders from the ZEEKR 007 and all-new ZEEKR 001, overall, the sales volume of ZEEKR has become more and more stable, mainly driven by the all-new ZEEKR 001 and ZEEKR 007. In April that has just passed, ZEEKR hit a record high of 16,089 sales in a month, and as of this April, ZEEKR’s cumulative deliveries have exceeded 240,000.

Therefore, it makes perfect sense that ZEEKR chose to go public at a time when its sales are surging and its brand influence is expanding.

In fact, it’s a result of riding the momentum that both ZEEKR and XiaoMi could go public on the U.S. stock market. However, the momentum ridden by XiaoMi is mostly given by the era, while ZEEKR created its own momentum.

Going public is the best way out

Actually, ZEEKR has always been looking for opportunities to go public.

As it is well known, ZEEKR could be considered a brand born in the bosom of Geely. Backed by the wealthy Geely, upon its inception ZEEKR bought 100% shares of Geely’s China Europe Automotive Technology Centre for RMB 800 million and 30% shares of Hao Han Energy for RMB 9 million, making Ningbo Wei Rui, which specializes in the R&D and production of batteries and motors, its own subsidiary.

It is reported that prior to the launch of ZEEKR 001, a significant portion of ZEEKR’s revenue came from the sale of batteries, motors, and other parts to Geely. Even now, the sales of batteries and motors to brands within and beyond the Geely system continue to stimulate growth in ZEEKR’s revenue. For example, in 2023, over a third of ZEEKR’s revenue came from non-automotive sales including batteries.

In addition, according to data disclosed in the prospectus, as the brand’s sales have taken off since its inception, ZEEKR’s revenue has been doubling. From 2021 to 2023, ZEEKR’s annual total revenue was RMB 1.5443 billion, RMB 19.6712 billion and RMB 33.9118 billion respectively.

However, the more ZEEKR sells, the more losses it incurs. From 2021 to 2023, ZEEKR’s annual net losses were RMB 4.5143 billion, RMB 7.6551 billion and RMB 8.2642 billion respectively. By the end of 2023, ZEEKR’s cash and cash equivalents were only RMB 3.2607 billion.

At the same time, in addition to the new products under development, in order to retain its overall competitive edge, ZEEKR will vigorously promote the setup of charging stations on a large scale on the one hand, and continue to focus on intelligence on the other, including developing its own Intelligent Driving, collaborating with Mobileye, and purchasing Nvidia’s DRIVE Thor chips, etc.This suggests that ZEEKR would have to spend significantly on technological R&D, channel expansion, energy replenishment, and marketing. According to historical data, ZEEKR alone spent 8.2642 billion in product R&D in 2023.

To resolve the financial issue, as early as October 2022, Geely had revealed ZEEKR’s plan for an independent IPO. The chosen listing location was not the US stock market, but the Hong Kong stock market. However, for various considerations, ZEEKR finally decided to pivot to the US stock market.

In November of last year, ZEEKR formally submitted its IPO application to the SEC (US Securities and Exchange Commission), intending to list on the NYSE under the stock code ZK. Still, the plan was temporarily shelved.

The reason lies in the fact that at that time, ZEEKR had not advanced to its current thriving state; an early listing might accelerate the exposure of its problems. Were they to choose to go public early, the only strong supporter of ZEEKR to make its capital story sound right would be Geely. But the capital market is not a place for “daddy” theory alone.

Furthermore, besides planning to solve financial issues via IPO, ZEEKR conducted two rounds of finance in August 2021 and February 2023, respectively.

The first round amounted to $500 million, with Intel Capital, CATL, Bilibili, Hung’s Company, and Boyu Capital investing. Upon completion of the investment, ZEEKR was valued at approximately $9 billion. The second round was $750 million, backed by Mobileye’s founder and CEO Amnon Shashua, CATL, Yuexiu Industrial Fund, Commerce Fund, Quzhou Xianan Intelligent Manufacturing Fund, etc. After completion, the valuation was around $13 billion.

However, with an increasingly crowded market and intensifying competition, ZEEKR needs more capital to maintain a competitive advantage in the long term.

Thus, going public is almost the best solution to ZEEKR’s financial problems.

In Conclusion

With additional capital from the stock market, the now more resourceful ZEEKR is ready to compete being stronger and more robust. According to official information, the funds raised by ZEEKR through the IPO will be used in the following three aspects:

  • About 45% towards the development of more advanced EV technology and expanding the product line;
  • About 45% towards sales and marketing and expanding ZEEKR’s service and charging network;
  • About 10% for general corporate purposes (Including operational capital requirements), to support ZEEKR’s business operations and development.

In short, by going public, ZEEKR has gained another opportunity for higher-quality growth.

For ZEEKR, going public is a new starting point. According to ZEEKR’s plan, they will also launch ZEEKR MIX and an unrevealed pure electric SUV this year. That means the total number of products for ZEEKR will expand to seven this year, and based on these seven models, they will strive to achieve their goal of selling 230,000 cars a year.Furthermore, going public in the U.S. stock market is also a powerful incentive for ZEEKR’s self-progress. After all, ZEEKR will need to place all company-related information and movements under the microscope of the market. This puts greater demands on ZEEKR’s finance, management, products, technology and other aspects.

Simultaneously, this IPO in the U.S. is also an excellent chance for ZEEKR to enhance its brand recognition domestically and internationally. ZEEKR’s target market isn’t just domestic, but also expansive international. Currently, ZEEKR has entered various international markets including Europe, Middle East and Southeast Asia, and by the third quarter of this year, will also be entering Singapore and Hong Kong-Macau region. In the future, ZEEKR is planning to enter the U.S. Robotaxi market.

In addition, ZEEKR’s IPO on the U.S. stock market has also to some extent liberated Geely, allowing it not to drag down Geely’s financial performance, while serving as the vanguard of the larger Geely system, driving Geely towards the transition to new energy.

Celebrating half-time isn’t suitable for ZEEKR. Moving forward, ZEEKR should continue to make efficient use of its resources, gradually transitioning to a more robust corporate state. This will help them gain more bargaining chips vital for its long-term development amidst the ongoing market competition and industry revolution.

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