Geely announced Thursday that it will sell electric vehicles from its new premium brand Zeekr directly to customers, a business endeavor for which it plans to open retail shops and build an online community.
Why it matters: The move is part of a broader plan by China’s largest private automaker to become a frontrunner in the electric and software-based vehicle race.
- Zeekr can sell directly because it operates as a standalone company within the Volvo parent company’s empire. “The goal for Zeekr is to become a technology company,” (our translation), said Geely president An Conghui during a press event at its Ningbo facility on Thursday.
- Direct sales, compared to the traditional model of selling cars through franchised dealerships, is seen as key to Tesla’s success in the global auto industry and has been adopted by a number of Chinese EV upstarts such as Nio.
Details: Zeekr on Thursday laid out plans to join the country’s most competitive mass-premium EV segment by opening two clubhouse-style flagship stores called “Zeekr Centers” and 60 smaller “Zeekr Spaces” in local shopping malls this year.
- The company expects to rapidly expand its sales footprint to a total of 225 branded shops in three years. It is on track to deliver its first model, the Zeekr 001, in October, according to An, who is also the CEO of the new EV unit.
- Equipped with Mobileye’s SuperVision, a hands-free advanced driver-assistance system, the company began taking orders for the four-door coupe on Wednesday at a starting price of RMB 281,000 (around $43,077) after subsidies.
- The Zeekr 001 is priced around 20% lower than Tesla’s locally made Model Y and Nio’s popular crossover, the ES6. It is roughly 20% more expensive than BYD’s premium model, the Han, and Xpeng’s P7 sedan. These models are considered the primary contenders expected to grab share from gasoline cars.
- Meanwhile, the company will launch a smartphone app in June capable of transacting online sales, and to help with forming a virtual community, An said.
- The management of multiple teams and the expenditure involved in operating a direct sales model is a big challenge for traditional automakers to take on, and is not currently feasible for all of its business units, An explained during the event.
“It’s an emotional play at the high end where consumers buy EVs because they’re high-tech gadgets with premium experience. That’s been a successful play in China and will continue to thrive without government subsidies.”—Stephen Dyer, managing director of global consultancy AlixPartners, told TechNode during the panel, “EV: What’s next as the industry recovers” at TechNode’s Emerge event in November.
Context: Volkswagen is one of the traditional auto majors which adopted a direct-sales model, opening its first branded shop in December in the eastern Chinese city of Hangzhou. It plans to build 40 stores across China over the next year or so, according to a Reuters report.
- Geely in March announced a RMB 2 billion investment initiative to set up Zeekr Technology and establish a presence in the fast-growing luxury EV segment.
Correction: An earlier version of this story incorrectly identified the EV company as Zeeker, not Zeekr.
Update: added the names of the November TechNode event and panel discussion that Stephen Dyer took part in.