Geely Automobile Holdings, China's second-largest carmaker, plans to embark on an asset-light strategy in the overseas smart electric vehicle (EV) market by working with local partners, defying a trend among mainland peers that seek to set up production plants in the West, its chief executive said in an exclusive interview.
While Chinese EV makers from global market leader BYD to fast-rising start-up Hozon Auto have built manufacturing facilities in countries like Hungary and Thailand, Geely hopes to boost overseas sales, including in Asia and the European Union, by partnering with local players, Gui Shengyue told the South China Morning Post on Tuesday.
"You must implement your go-global strategy in a systematic way," he said from his Hong Kong office. "Geely will adopt different approaches for different countries and regions. I believe we have our own advantages in this regard."
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Gui Shengyue, chief executive and executive director of Geely Automobile Holdings, in his office in Wan Chai, Hong Kong. Photo: Edmond So alt=Gui Shengyue, chief executive and executive director of Geely Automobile Holdings, in his office in Wan Chai, Hong Kong. Photo: Edmond So>
Geely Auto was able to manage the additional 18.8 per cent tariff levied by the EU on its pure EVs made in China, Gui said, adding that the import levies would not stop the company from gaining a bigger market share on the continent.
The EU voted in October to impose tariffs on pure EVs made in China after an anti-subsidy investigation. The new duties are on top of the standard 10 per cent tariff applied to pure EVs made in China. Geely Auto was subject to an additional 18.8 per cent tariff.
"With our technological advantages in various aspects, I believe we are capable of digesting the [EU] tariffs," Gui said. "A real and effective way to lower costs is by technological advancement."
Gui said Geely Auto, aware of its lack of know-how and after-sales network abroad, had no immediate plans to build plants in the EU.
Instead, the company adopted an asset-light strategy - a business model under which a company holds only a small amount of fixed assets on its balance sheet - to expand overseas, where intelligent EVs assembled by mainland companies, featuring self-driving systems and digital cockpits, were becoming increasingly popular, he said.
Malaysia's first locally produced EV, the e.Mas7, is based on Geely's Galaxy E5. Photo: AFP alt=Malaysia's first locally produced EV, the e.Mas7, is based on Geely's Galaxy E5. Photo: AFP>
On Monday, Malaysian carmaker Proton, which is 49 per cent owned by billionaire founder Li Shufu's private investment vehicle Zhejiang Geely, launched the e.Mas7 SUV, the first fully-electric car in the Southeast Asian nation. It was based on Geely's Galaxy E5.
Earlier this year, Renault Korea, in which Geely owns a 34 per cent stake, launched the Grand Koleos SUVs, which come in plug-in hybrid and petrol versions. In Europe, Geely Auto relies on the sales distribution network of its sister company Volvo Cars, which is controlled by Li's private entity.
Gui said China's car sales might have peaked. "It would be good if overall car sales in each of the coming years can maintain the size of this year," Gui said. "That's my fundamental reading of the market."
He said Geely Auto's overseas sales in 2025 are expected to outgrow its mainland operations, buoyed by foreign consumers' increasing interest in the company's smart EVs.
Export of Geely Auto's Chinese-made cars jumped 56 per cent year on year between January and November to 379,396 units, 19.3 per cent of the company's total deliveries in that period. In comparison, BYD's sales outside the mainland contributed only 10 per cent of the total deliveries.
Geely's at the Automechanika trade fair in Frankfurt, Germany. Photo: Xinhua alt=Geely's at the Automechanika trade fair in Frankfurt, Germany. Photo: Xinhua>
At home, Geely's sales grew 26.1 per cent on year to 1.59 million vehicles in the first 11 months this year. Its EV deliveries surged 92 per cent from a year earlier to 777,029 units in the same period.
While the company hopes to profit from its petrol-powered cars, its shift towards EVs has accelerated. Half of Geely's production output now consists of EVs. Gui said the company's EV business was breaking even, a rare achievement attained by only a handful of mainland EV assemblers. Only BYD, Li Auto and Huawei Technologies-backed maker Aito have been profit-making, according to industry data.
Gui said the days of easy money are over for China's EV makers. "In past years, the electric vehicle concept was very hot in the capital market - there were investors who were willing to give money for a good story," Gui said. "For now, the capital market valuation of carmakers has normalised, and if you can't make money, it won't work."
"For many Chinese carmakers, if they stay in the red for a long period of time and keep burning money, I don't think they can sustain [their business]," he added. "In the past, they might survive despite losses because they could get funding from the capital market, but this path is blocked."
