Geely, the end of the disguise - MobilityBRIEF ??????? - February 17th
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In the news this week
Geely, the end of the disguise
We had to make an edito on it: not a week goes by without a new information to share in which Geely is involved, either directly or indirectly. An hyperactivity that contrasts with the notoriety of the brand, unknown to the average consumer outside of China while climbing the ladder of the automotive industry. From making fridges to making cars there's only one st...well no actually there's many many steps, but these are the steps Geely has overcome since 1986, first by creating motorcycles, then mini-vans and finally starting its automotive activity in 2002. But Geely's first major milestone on the international level has been its acquisition of Volvo Cars in 2010, setting a foot in Europe and the US while avoiding the tricky legitimacy topic at that time.
So what is Geely, in 2023? First, let's consider Geely as it is: a legacy automaker, required to switch from an ICE world to a BEV and connected new era. To achieve this transformation, Geely has been through multiple ambitious strategic plans, resulting on the following organization :
But Geely also has international ambitions, as Volvo Cars acquisition only was the first step of the Chinese group beyond its own borders: LEVC (London famous taxis), Polestar (through Volvo), Lotus Cars, Smart and even a share in Aston Martin lately. But Geely isn't simply looking for a front brand like SAIC did with MG Motors. The "Geely touch" in those buyouts is the conservation of each brand's DNA, mixing synergies with independance. Hence Volvo not being "absorbed" into the group while benefiting from the synergies, the joint-venture with Mercedes-Benz for Smart's reboot or the rumoured IPO of Lotus Cars this year. And Geely is more than a buy-it-all company: for sure buying out historical European brands makes sense, especially when you sell in emotion-driven markets such as Europe or have expectations in reaching the luxurious market like they do (eg. Lotus), but the double transition to tech and EV kind of reboot the expectations. Which is why Geely opted to create two new EV pureplayers in its ranks, Zeekr and Radar, and not to restrain them to the sole Chinese market. The end of the disguise. Zeekr, by the way, raised $750M this week for this matter, from the likes of EV battery-leader CATL or Mobileye's CEO Prof. Amnon Shashua. What also strikes out is the width of Geely's group: motorcycles, ride-hailing mobility services, consumer electronics, eVTOLs and even motorsports and education are represented in the portfolio of the group. All of them converge with the strategy of the group to evangelize people towards automotive and its jobs, and cover every evolution in the mobility world. Even bets like Geespace, a commercial aerospace company, have a sense in it, as the GeeSAT constellation will be used for autonomous driving, logistics and mapping.
Now comes the questioning, a week before Geely unveils its brand new NEV strategy. Will its new brands succeed in establishing themselves as BEV leaders? Will its European DNA coming from its buyouts help Zeekr crack the European premium market better than other Chinese competitors? Will the independence of its brands remain a strength? Will micromobility be considered as part of the wide portfolio of Geely? By the way, can this width of portfolio be a distraction, or an opportunity to diversify and mitigate the risk through the use of external capital (IPOs, joint-ventures)?
Some answers may come next Friday, we'll keep you up-to-date in our Mobility Brief. Until then, keep an eye on our cheat sheet of Geely's businesses.
News of the week
???Micromobility & Transit
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Dance , the German electric mobility subscription start-up, announced yesterday it has raised €12M from both current and new investors, which will fund its growth in its 5 current markets. Dance recently launched a B2B offer which welcomed the likes of Google as customer.
After VanMoof complicated moments, the heat came towards Cowboy , the Belgian e-bike start-up, rumored to witness the same kind of tight months ends than its Dutch competitor. "Fake news" should have told its CEO, who counter-attacks, saying that profitability is to be expected by this summer. Has the Cowboy tamed the e-bike market?
The Olympic Games are coming to Paris next year and the city wants it to be the best showcase for its cycling policies. It's no surprise then to see them unveil a new plan for 55-new kilometers of cycle lane into the capital by the beginning of the Olympic Games, that will link every Olympic venue in the city.
UP.Partners , a VC focused on mobility and working with Toyota and Porsche among others, has issued its "Moving World Report 2023". Notable statistic: they predict e-bikes sales will overtake every car sales in Europe by 2025, betting on the continuation of both current sales trend (downwards for cars, upwards for bikes).
???Automotive & Manufacturing
It's the Ford week, as the American manufacturer has monopolized the news. After announcing its arrival in Formula 1 through a partnership with RedBull Powertrains, Ford came back to core business announcement. First with its $3.5B Michigan battery announcement which has sparked controversy, as Ford is partnering with Chinese battery leader CATL. A strategic move that would allow them to gain cheaper and faster charging batteries, through the production of 35GWh of LFP batteries per year from 2026. But this partnership with the Chinese company cast doubts over the eligibility of the plant to IRA tax credits for vehicles equipped with its batteries, and even in China, the maneuver will be followed closely, as the Government is fearing that Ford would access sensitive battery tech. "America first" was more the motto of the previous American president, but Biden may be the one turning them into action, as Ford's investment also means the American giant is downsizing its operations in Europe. 3800 jobs will be cut (11% of its workforce), mainly in UK and Germany, mainly in product development teams, in a move aiming to refocus on EV and target profitability in Europe.
Renault Group announced its results for 2022, confirming the company is on track with its Renaulution plan, as profits doubled to reach 5,6% of operational margin, a record cash flow of €2.1Bn and a full order book. The reorganisation is contining backstage, with Ampere (EV and software division) IPO planned by the end of the year, and Aramco rumored to join Geely and Renault in the Horse Project (ICE powertrains). A great day concluded by the unveil of the Alpine A523 F1 in London by both Luca de Meo and Laurent Rossi , in which the brand inducted Zinedine Zidane as a brand ambassador.
This time, it's official: the European Parliament endorsed the ban of diesel and petrol car sales by 2035 in EU. To be noted: carmakers selling less than 10k cars per year will be able to "negociate weaker targets until 2036". Truck and buses are next? However, speaking of European regulations, save the date: March 14th, where the Net Zero Industry Act and the European Critical Raw Materials Act will be discussed at the Parliament.
???AV
It's showtime for AV regulation in the US: first, the NHTSA has finally required a recall from Tesla for 363k vehicles equipped with "Full Self-Driving" option. The organization argues that Tesla's software "may allow the vehicle to act unsafe around intersections". Tesla will manage the recall through an OTA update, but the NHTSA is warning that its investigations are still ongoing, with the threat of other recalls incoming. Secondly, self-driving truck companies are fearing that their testing on public roads in California may always require a safety operator. The related bill has not been signed into the law by the Governor yet, and is representative of the fact that legislators don't want to be rushed into self-driving operations without being fully comfortable with it themselves, regardless of the actual technological advancements.
A week after Cruise announcement for its Origin shuttle, this time it's Amazon's Zoox , whose robotaxi/shuttle is now allowed to be tested on open roads. Cruise, Waymo/Zeekr and now Zoox: the lights are getting green for purpose-built robotaxis. All eyes on commercialization this year? And a real improvement for both operations and profitability?
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