FYI: Due to recent EU tariffs on Chinese EVs, Zeekr is exploring European manufacturing to continue its global expansion.
Zeekr Eyes European Production Amid Rising Geopolitical Tensions
Every interaction with Zeekr reveals the challenges posed by escalating geopolitical tensions and a cooled (trade) war that have hindered the brand’s ambitions to expand beyond China. Adding to these challenges is a new EU tariff of 19.9% on Geely-made cars imported from China, forcing the Sino-Swedish spin-off of Geely to revamp its strategy to ensure European sales remain a viable part of its global expansion plans.
Exploring European Production
According to a recent Bloomberg report, Zeekr is seriously considering manufacturing its models in Europe. CEO Andy An stated, "We are actively proceeding with localization work in Europe, and we will make an announcement on it at the right time." This suggests that the brand is further along in its European production plans than previously assumed.
Zeekr Goes Public
In a move similar to Polestar, Geely separated Zeekr into an independent entity. The brand’s IPO in May saw its stock open at $21, although it has since declined. This reflect the broader challenges facing Chinese EV brands internationally.
Impact of EU Tariffs
The EU has accused Chinese EV brands of benefiting from unfair subsidies, leading to the imposition of significant tariffs on imported EVs, regardless of whether they are native Chinese brands like Zeekr or European models manufactured in China, such as the Mini Cooper Electric or BMW iX3. Despite appeals from China, these tariffs remain largely unchanged, compelling Chinese brands to adopt a different approach if they wish to penetrate the European market.
Leveraging Existing Manufacturing Facilities
Unlike brands like BYD that would require time to construct new factories, Geely and Zeekr have a different advantage. Should Zeekr proceed with European manufacturing, it plans to utilize existing Geely-owned (through Volvo) plants in Sweden and Belgium. These facilities are already set to produce the Volvo EX30, built on the Zeekr-developed SEA (Sustainable Experience Architecture) platform.
A Vision for Global Expansion
Zeekr demonstrates its commitment to international expansion by updating its 009 van and introducing the Zeekr X crossover to markets like Thailand and Hong Kong. Additionally, the launch of the Zeekr 7X, positioned to compete with the Tesla Model Y, underscores Zeekr’s readiness to compete on a global stage.
Financial Strategy and Market Position
Zeekr’s moves go beyond national pride or the ambition to globalize a Chinese brand. Similar to other EV startups, Zeekr must scale its operations to achieve profitability. The brand is nearing this goal, with Q1 losses narrowing by 18% to $278 million and projections to turn a profit by the end of the year.
The U.S. Market: A Future Possibility?
The potential entrance of Zeekr into the U.S. market remains uncertain. With the ongoing election cycle, both major political candidates exhibit resistance against Chinese-produced EVs. However, manufacturing in Europe might enable Zeekr to bypass the 100% tariff and avoid the stigma associated with Chinese-made vehicles. For instance, the U.S. release of the Volvo EX30 has been postponed as models will now be sourced from Belgium instead of China. This opens the possibility of Zeekr X joining the EX30 in the U.S. market.
Conclusion
Zeekr’s strategic plans to overcome geopolitical barriers and EU tariffs through potential European manufacturing highlight its unwavering commitment to global expansion. By leveraging existing facilities and continuing to introduce competitive models, Zeekr aims to solidify its position in the international EV market and achieve profitability. Stay tuned to see if Zeekr will make a significant splash in the European and possibly U.S. markets in the near future.
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William Kouch, Editor of Automotive.fyi
