Geely’s Bold Move: Partnering for Global EV Success
In a departure from the norm, China’s second-largest carmaker, Geely Automobile Holdings, is adopting an asset-light strategy to conquer the overseas smart electric vehicle (EV) market. Instead of building production plants in Western countries, Geely plans to partner with local players to boost sales in Asia and the European Union.
A Systematic Approach
According to Geely’s CEO, Gui Shengyue, the company will implement a tailored approach for different countries and regions, leveraging its unique advantages. This strategy is a deliberate move away from the trend of setting up manufacturing facilities in the West, as seen with other Chinese EV makers like BYD and Hozon Auto.
Overcoming EU Tariffs
Geely has successfully managed the additional 18.8% tariff imposed by the EU on its pure EVs made in China. Gui believes that the company’s technological advancements will enable it to absorb the tariffs and maintain its market share in the EU.
Asset-Light Strategy
Geely’s approach is centered around partnering with local companies to expand its overseas presence. This asset-light strategy allows the company to focus on its core strengths while minimizing its fixed assets. In Malaysia, for instance, Geely has partnered with Proton to launch the e.Mas7, the country’s first locally produced EV.
Growing Overseas Sales
Geely’s overseas sales are expected to surpass its mainland operations by 2025, driven by increasing demand for its smart EVs. The company’s export of Chinese-made cars jumped 56% year on year between January and November, with 19.3% of its total deliveries coming from overseas sales.
A Shift Towards EVs
At home, Geely’s sales have grown 26.1% on year, with EV deliveries surging 92% from a year earlier. The company’s shift towards EVs has accelerated, with half of its production output now consisting of EVs. Notably, Geely’s EV business has broken even, a rare achievement among mainland EV assemblers.
A New Era for EV Makers
Gui warns that the days of easy money are over for China’s EV makers. With the capital market valuation of carmakers normalizing, companies must focus on profitability to sustain their business. Those that fail to make money will struggle to survive, as funding from the capital market becomes increasingly scarce.
Leave a Reply