China's Geely plans new EV unit after profit falls 32% in 2020

Beijing

CHINA'S Geely Automobile Holdings Ltd on Tuesday announced a joint venture with its parent group for electric vehicles (EV) and a new brand called Zeekr, but its shares fell over 6 per cent on news its 2020 profit dropped by a third.

Geely Automobile sold 1.32 million cars last year, down from 1.36 million units in 2019, as auto sales in the world's biggest market were hit by the Covid-19 pandemic.

Overall auto sales in China fell 1.9 per cent to 25.3 million vehicles in 2020, according to industry data.

Geely Automobile also said on Tuesday it will form a joint venture for electric vehicles (EV) with its parent group, and launch a new brand called Zeekr, as its profit fell 32 per cent last year.

In a stock exchange filing, Geely Automobile said the venture will work on research and development, purchase and sale of smart electric vehicles under Zeekr brand.

Geely Automobile and parent Zhejiang Geely Holding Group will jointly invest two billion yuan (S$411.97 million) in the new venture. Geely Automobile will own 51 per cent of the new company, it said.

In two earlier reports, people familiar with the matter exclusively told Reuters about Geely's plans for the new company and brand.

Hangzhou-based Geely Automobile, the highest-profile Chinese automaker in the world due to parent group's investments in Volvo Cars and Daimler AG, posted 2020 profit of 5.53 billion yuan, versus 8.19 billion yuan in 2019.

One analyst expected Geely to post a profit of 4.02 billion yuan, according to Refinitiv data. Revenue fell 5 per cent from the previous year to 92.11 billion yuan. It expects to sell 1.53 million cars this year. REUTERS