China’s Geely Plans New EV Unit After Profit Fell by a Third in 2020, Shares Drop

Geely
FILE PHOTO: The Geely Automobile Holdings logo is pictured at the Auto China 2016 auto show in Beijing, China April 25, 2016. REUTERS/Kim Kyung-Hoon

BEIJING ⸺ China’s Geely Automobile Holdings Ltd on Tuesday announced a joint venture with its parent group for electric vehicles (EV) and a new brand called Zeekr, but its shares fell over 6% on news its 2020 profit dropped by a third.

Geely Automobile sold 1.32 million cars last year, down from 1.36 million units in 2019, as auto sales in the world’s biggest market was hit by the COVID-19 pandemic.

Overall auto sales in China fell 1.9% to 25.3 million vehicles in 2020, according to industry data.

Geely Automobile also said on Tuesday it and its parent group will form a joint venture for electric vehicles (EV) and launch a new brand called Zeekr, and its profit fell 32% last year.

In a stock exchange filing, Geely Automobile said the venture will work on research and development, purchase and sale of smart electric vehicles under Zeekr brand.

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Geely Automobile and parent Zhejiang Geely Holding Group will jointly invest 2 billion yuan in the new venture. Geely Automobile will own 51% of the new company, it said.

In two earlier reports, people familiar with the matter exclusively told Reuters about Geely’s plans for the new company and brand.

Hangzhou-based Geely Automobile, highest-profile Chinese automaker in the world due to parent group’s investments in Volvo Cars and Daimler AG, posted 2020 profit of 5.53 billion yuan ($850 million), versus 8.19 billion yuan in 2019.

One analyst expected Geely to post a profit of 4.02 billion yuan, according to Refinitiv data. Revenue fell 5% from the previous year to 92.11 billion yuan. 

It expects to sell 1.53 million cars this year. 

Geely Automobile’s parent group announced a flurry of tie-ups by Geely earlier this year as the automaker pursues its goal of becoming a leading EV contract manufacturer and engineering service provider.

Geely Automobile and Volvo Cars last month abandoned their merger plans but launched a new entity to combine their powertrain operations and expand cooperation on electric vehicles.

($1 = 6.5094 Chinese yuan)

Reporting by Yilei Sun and Ryan Woo; Editing by Himani Sarkar, Tom Hogue and Michael Perry; Reuters

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