Five early investors in Zeekr, including CATL and Intel Capital, have raised concerns about Geely’s US$2.2 billion proposal to take the EV unit private.

The investors sent letters to Zeekr’s board, stating that the offer undervalues the company.

They argue the US$6.5 billion valuation implied by the offer is lower than competitors like Li Auto, Nio, and Xpeng, and that Zeekr’s financial performance is stronger.

Geely, which owns about two-thirds of Zeekr, announced the take-private bid on May 7, aiming to merge Zeekr into its Geely Auto unit.

Zeekr’s valuation has varied, starting at US$9 billion in 2021, rising to US$13 billion in a later round, then dropping to US$5.5 billion at IPO.

Neither Geely nor Zeekr has commented. Discussions with Zeekr’s special committee are ongoing.

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🔗 Source: Reuters

🧠 Food for thought

1️⃣ Zeekr’s valuation rollercoaster highlights EV market uncertainty

Zeekr’s dramatic valuation shifts reflect the broader volatility in the electric vehicle sector, with investors struggling to find stable pricing models.

The premium EV maker has experienced remarkable valuation swings, from $9 billion in its 2021 initial funding round to $13 billion in early 2023, before dropping to just $5.5 billion at its 2024 IPO, and now valued at $6.5 billion in Geely’s privatization offer1.

This pattern reflects challenges faced across the EV industry, where companies struggle to maintain consistent valuations amid rapidly changing market conditions.

Despite delivering 41,403 vehicles in Q1 2025 (a 25% year-over-year increase) and improving its gross margin to 19.1% from 16.3% a year earlier, Zeekr’s market valuation remains well below its peak private funding levels2.

The disconnect between operational improvements and market valuation highlights growing skepticism about EV companies’ ability to deliver sustained profitability in an increasingly competitive landscape.

2️⃣ Chinese EV market faces inevitable consolidation pressure

The controversy over Zeekr’s privatization reflects a broader industry trend toward consolidation as smaller players struggle to achieve sustainable scale.

Industry analysts have predicted that companies like Nio, Xpeng, and Li Auto may face challenges surviving independently in the next three years, with the survival threshold estimated at 2 million annual vehicle sales3.

This prediction aligns with Geely’s strategic shift toward consolidation, as evidenced by its campaign to “improve strategic focus and eliminate internal competition” mentioned in the original news article.

The Chinese EV market has become increasingly crowded, with domestic automakers increasing their market share from 43% in 2020 to 62% in 2024, intensifying competition among local brands4.

Despite Zeekr’s status as “Geely’s best asset,” the company faces the same fundamental challenge as other EV makers: achieving sufficient scale amid fierce competition from dominant players like BYD and Tesla.

3️⃣ The widening public-private valuation gap in tech companies

Zeekr’s case demonstrates a growing disconnect between private funding valuations and public market realities for technology companies.

After achieving a $13 billion valuation in private markets in early 2023, Zeekr went public at less than half that value ($5.5 billion) in 2024, highlighting the more stringent profitability expectations in public markets1.

This gap reflects experiences of other tech companies that achieved lofty private valuations only to face more skeptical public investors focused on near-term profitability rather than growth narratives.

Zeekr’s integration with Lynk & Co in February 2025 signals Geely’s recognition that operational efficiency must take precedence over maintaining independent brand identity in the current market environment2.

The resistance from early investors like CATL and Intel Capital to the privatization offer reflects the tension between early-stage investors who bought in at higher valuations and strategic parent companies seeking to consolidate operations at lower costs.

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