Executive Summary / Key Takeaways

• Strategic Integration Fuels Growth: ZEEKR Group's acquisition of Lynk & Co in February 2025 significantly expands its market reach across premium and mid-to-high-end segments, targeting 710,000 vehicle deliveries in 2025 and aspiring to 1 million annual sales by 2026.
• Technological Leadership in Hybrids and ADAS: The company is differentiating through its "super electric hybrid technology" for large vehicles, offering superior performance and range, alongside advanced G-Pilot ADAS systems and ultra-fast "golden battery" charging, which are critical for competitive advantage and margin expansion.
• Improving Financials and Path to Profitability: ZEEKR Group demonstrated robust Q1 2025 performance with RMB22 billion in revenue and a 16.5% vehicle gross margin (ZEEKR brand at 21.2%), driven by cost optimization and premium product mix. Management aims for U.S. GAAP breakeven in 2025, supported by significant R&D and SG&A expense reductions post-integration.
• Intense Competition and Regulatory Scrutiny: Operating in a highly competitive global EV market, ZEEKR faces challenges from established players and emerging rivals. Recent allegations of inflated sales through "zero-mileage car" practices highlight regulatory risks and the need for transparent reporting.
• Privatization Offer Underpins Value: Geely Automobile (GELYY)'s offer to take ZEEKR private at $25.66 per ADS, valuing the company at $6.5 billion, signals confidence in ZEEKR's long-term potential and provides a floor for valuation amidst market volatility.

A New Era for Premium Electric Mobility

ZEEKR Intelligent Technology Holding Limited, established in 2017 in Hangzhou, China, has rapidly emerged as a formidable force in the premium new energy vehicle (NEV) sector. The company's foundational strategy centers on full-stack in-house development, spanning vehicle architecture, electronic and electrical architecture (EEA), battery and powertrain systems, autonomous driving, and intelligent cockpits. This integrated approach positions ZEEKR to capitalize on the accelerating global shift towards electrification and smart mobility. The broader industry is witnessing a profound transformation, with NEV penetration rates in China surpassing 50% for three consecutive months in Q3 2024, underscoring the immense market opportunity.

ZEEKR's journey began with impactful product launches, notably the ZEEKR-001, which redefined the shooting-brake segment in China, and the ZEEKR-009, which pioneered the premium pure electric MPV market. These early successes laid the groundwork for its strategic evolution, culminating in a pivotal moment in February 2025 with the full integration of the Lynk & Co brand. This strategic move, initiated by Geely Holding Group, was designed to rationalize shareholding, reduce internal competition, and unlock significant synergies across R&D, manufacturing, and supply chains. The combined entity now aims to cover a broader market spectrum, from RMB150,000 to RMB500,000, significantly expanding its addressable market to approximately 60% of the Chinese domestic passenger car market.

Technological Prowess: The Engine of Differentiation

At the heart of ZEEKR's investment thesis lies its robust technological differentiation, which underpins its competitive positioning and future growth. The company prides itself on its full-stack in-house development capabilities, a rarity in the industry.

A cornerstone of ZEEKR's innovation is its Super Electric Hybrid Technology, developed over three years and set to feature in flagship models like the ZEEKR 9X and ZEEKR 8X. This groundbreaking system seamlessly combines the advantages of pure electric, plug-in hybrid, and range extender systems. It promises a pure EV-like driving experience without range anxiety, offering superior driving performance comparable to top-end luxury products, even when the battery is depleted. Crucially, this technology boasts a 900-volt ultra-fast charging capability, supporting battery packs of 50 kWh to 80 kWh, and significantly lower maintenance costs compared to peer products. Management projects this powertrain product alone to contribute 150,000 to 200,000 vehicles annually in the future, with these hybrid models expected to yield higher gross margins than pure BEVs.

In battery technology, ZEEKR Group's "golden battery" has ushered in a new era of ultra-fast charging for lithium-ion solid-state batteries, positioning it as one of the fastest charging batteries globally. This technology is being unified and upgraded with advanced in-house developments from Geely Holding Group. Complementing this, the company has launched the V4 ultra-fast megawatts project, with a station in Hondo delivering over 1,400 kilowatts, capable of simultaneously ultra-fast charging three 100-volt models across both ZEEKR and Lynk & Co brands.

For intelligent driving, ZEEKR has unified its assistance solution under G-Pilot, with future models featuring G H7 and H9 systems. The ZEEKR 9X will be pivotal, offering Level 3 ready intelligent driving assistance capabilities with the G-pilot H9 system, expected to enter mass production and delivery by the end of 2025. The Lynk & Co 900, meanwhile, incorporates advanced G-pilot H5 and HTML systems and is the first production model to utilize NVIDIA (NVDA)’s Drive HAX platform. This synergy in ADAS and smart cockpits, with shared domain controllers and electronic architecture, while maintaining distinct user experiences (ZEEKR iOS and Fly Auto), is expected to drive economies of scale and accelerate software upgrades. ZEEKR's self-developed SEA autonomous driving, empowered by an end-to-end AI-powered large model, is iterating rapidly, with a nationwide rollout of map-free urban NZP for all 2025 model years expected by year-end 2024.

These technological advancements are not merely features; they are strategic differentiators that enhance ZEEKR's competitive moat. The "super electric hybrid technology" directly addresses range anxiety, a key barrier for EV adoption, and targets the lucrative large luxury SUV segment currently dominated by conventional gasoline powertrains from legacy brands like Mercedes-Benz (MBGAF), BMW (BMWYY), and Audi. This positions ZEEKR to capture significant market share by offering a compelling blend of performance, efficiency, and advanced features.

Operational Momentum and Financial Trajectory

ZEEKR Group's financial performance in early 2025 reflects the initial benefits of its strategic integration and product offensive. For the first quarter of 2025, the company reported robust revenue of RMB22 billion, with vehicle revenue reaching RMB19.1 billion. Vehicle gross margin achieved an impressive 16.5%, surpassing management's guidance of 15% and marking a 3.4 percentage point year-over-year increase. Notably, the ZEEKR brand itself achieved an all-time high margin of 21.2%, while Lynk & Co's margin stood at 11.4%. This improvement is attributed to disciplined cost management, economies of scale, and an enhanced premium product mix.

The company delivered 114,011 vehicles in Q1 2025, a 21% year-over-year increase, solidifying its position among China's premium EV leaders. This builds on a strong 2024, where ZEEKR Group achieved total sales of 500,000 vehicles, with the ZEEKR brand growing 87% year-over-year to over 222,000 units and Lynk & Co delivering 280,000 units. The combined pro forma revenue for ZEEKR Group in 2024 was RMB130.9 billion, with over 507,000 vehicle deliveries.

Operational efficiency is a key focus. R&D expenses in Q1 2025, while up 25% year-over-year, saw a 25.6% quarter-over-quarter decrease, exceeding the company's 20% savings target. SG&A expenses also decreased significantly, by 9.2% year-over-year and 35.8% quarter-over-quarter. These efficiencies, combined with higher revenue, led to a 60% year-over-year reduction in net loss to RMB763 million in Q1 2025, a significant step towards sustainable profitability. Management anticipates 10% to 20% R&D expense reduction, 5% to 8% BOM cost reduction, and 10% to 20% savings in corporate functions post-integration.

From a liquidity perspective, ZEEKR demonstrated strong free cash flow of RMB1.5 billion in 2024. While Lynk & Co recorded a free cash outflow of RMB400 million, the pro forma combined ZEEKR Group still achieved a positive free cash flow of RMB1.1 billion for FY 2024. Capital expenditures are expected to increase slightly in 2025 and 2026 for the combined entity, but in a constrained manner, reflecting improved synergy and efficiency rather than proportional growth.

Competitive Landscape and Strategic Positioning

ZEEKR operates in a fiercely competitive global EV market, vying with established players and agile startups. Its competitive positioning is shaped by its technological edge, strategic integration, and market-specific approaches.

Compared to global EV leader Tesla (TSLA), ZEEKR differentiates itself through its deep integration with the Geely ecosystem and a focus on versatile, intelligent vehicles, particularly in the premium and luxury segments. While Tesla excels in global brand recognition and autonomous driving maturity, ZEEKR's "super electric hybrid technology" offers a compelling alternative to pure BEVs, addressing range anxiety and potentially capturing market share in regions where charging infrastructure is still developing. ZEEKR's in-house full-stack development, including its "golden battery" and G-Pilot ADAS, aims to provide intuitive user experiences and competitive performance.

Against Chinese rivals like NIO (NIO), ZEEKR's expanded product portfolio, especially with the Lynk & Co integration, offers broader market coverage. NIO's strength lies in its service ecosystem, particularly battery swapping. ZEEKR, however, aims to compete with its ultra-fast charging infrastructure and a focus on diverse powertrain options, including high-margin PHEVs. ZEEKR's production scale, backed by Geely, provides a significant advantage over many startups.

When compared to XPeng (XPEV), known for its AI-driven features and software innovation, ZEEKR's unified ADAS solution (G-Pilot) and its partnership with NVIDIA for advanced chipsets aim to match or exceed software sophistication. ZEEKR's broader component sales also provide a diversified revenue stream, potentially offering more financial resilience. Similarly, against Li Auto (LI), which focuses on family-oriented extended-range EVs, ZEEKR's expansion into large luxury SUVs with super electric hybrid technology directly targets a premium segment with similar practical benefits but potentially more advanced smart interiors and a global reach.

ZEEKR's strategy involves distinct brand positioning: ZEEKR as a global luxury technology brand and Lynk & Co as a global new energy vehicle brand covering mid-to-high-end markets. This differentiation, coupled with shared technology platforms and streamlined operations, is designed to maximize market penetration while minimizing internal cannibalization. The company's two decades of car manufacturing experience within the Geely Holding Group provides a unique edge in powertrain systems, including engines and gearboxes, compared to many newer competitors.

However, the company faces intense competition, particularly in the Chinese market, which management acknowledges. Recent allegations of inflated sales through "zero-mileage car" practices in late 2024, as reported by state media, pose a significant reputational and regulatory risk. This practice, where cars are insured before being sold to buyers to meet sales targets, has drawn scrutiny from government bodies. While ZEEKR has stated its commitment to compliance, such incidents can impact investor confidence and necessitate greater transparency.

Outlook and Growth Trajectory

ZEEKR Group has set ambitious targets for 2025 and beyond, underpinned by its strategic integration and product roadmap. The company is committed to delivering 710,000 vehicles in 2025, comprising over 320,000 ZEEKR brand vehicles and 390,000 Lynk & Co vehicles. This represents a substantial increase from its 2024 pro forma deliveries of over 507,000 units. Management expects positive sales momentum in the latter half of 2025, driven by new product launches and expanded sales networks.

The product offensive for 2025 is robust. Lynk & Co will launch its first EMP mid-to-large sedan in H2 2025. ZEEKR will introduce the ZEEKR 9X in Q3 and another large luxury SUV (8F) in Q4, both featuring the advanced super electric hybrid technology. The ZEEKR 9X, with its Level 3 autonomous driving capabilities (G-pilot H9 system), is slated for mass production and delivery by year-end 2025. These new models, particularly the high-margin hybrid offerings, are expected to be key contributors to achieving the sales targets and improving overall profitability.

Internationally, ZEEKR aims for approximately 10% of its 2025 annual sales target to come from overseas markets. The company is accelerating its global expansion, with the Lynk & Co 08EMP and ZEEKR 7X already being shipped overseas, and ZEEKR 7X deliveries in Europe commencing in May 2025. A unified sales company will be established outside Europe to streamline international market development for both brands, leveraging existing infrastructure and coordinated strategies.

The company reiterates its target of achieving quarterly U.S. GAAP breakeven in 2025 and aims for a full-year vehicle margin of around 15%. This outlook is supported by anticipated synergies from the Lynk & Co integration, including significant reductions in R&D and SG&A expenses, as well as BOM cost savings. ZEEKR Group aspires to become the world's leading premium new energy vehicle group with annual sales of 1 million units within two years, by 2026.

Conclusion

ZEEKR Intelligent Technology Holding Limited stands at a pivotal juncture, transforming from a rapidly growing EV startup into a diversified premium NEV powerhouse through its strategic integration with Lynk & Co. The company's core investment thesis is firmly rooted in its technological leadership, particularly in super electric hybrid powertrains, advanced ADAS, and ultra-fast charging solutions, which provide tangible competitive advantages in a crowded market. These innovations are not just features but strategic enablers for market expansion and margin improvement, directly addressing consumer pain points like range anxiety and offering compelling alternatives to traditional luxury vehicles.

While ZEEKR's journey is marked by impressive growth and a clear roadmap to profitability, it is not without challenges. The intense competitive landscape, coupled with recent scrutiny over sales reporting practices, underscores the need for robust governance and transparent operations. However, the company's commitment to its ambitious sales targets, its disciplined approach to cost optimization post-integration, and the underlying value recognized by Geely Automobile's privatization offer suggest a strong conviction in its long-term potential. For discerning investors, ZEEKR represents an opportunity to participate in the evolution of premium electric mobility, driven by a blend of strategic foresight, technological innovation, and a relentless pursuit of scale and efficiency.