Volvo Owner Geely Plans to Launch a Premium Electric Brand to Compete with Tesla in China

author: Eric Walz   

Electric automaker Tesla might be facing some new competition in China, which is the world's biggest auto market. Chinese automaker Geely, which is the parent company of Swedish automaker Volvo Cars, is planning to launch a dedicated luxury-electric brand in China, according to sources that spoke to Reuters.

The new electric brand will be a premium nameplate called "Zeekr" under Geely's soon to-be-launched EV unit named Lingling Technologies, according to three people, who declined to be named as the plan is not yet public. Geely's new EV brand will help the automaker compete in the growing luxury electric vehicle segment. 

Reuters first reported Geely's plans for Lingling last month.

The company will roll out battery-powered models under the new marque based on its open-source EV chassis, which Geely announced in September. The platform is named "Sustainable Experience Architecture (SEA), the sources said. SEA is the automaker's first dedicated EV platform.

The new electric marquee brand will contribute to Geely founder and Chairman Li Shufu's ambitious plans to build premium vehicles like Mercedes-Benz, but Geely will also be competing with Tesla, especially in China where the automaker faced little competition so far in the premium segment from China's automakers. 

In addition to owning Volvo Cars, Geely holds a 9.7% of German automaker Daimler AG.

Geely plans to open showrooms, or "hubs", in city centers to sell its electric cars at a fixed price instead of having a traditional network of dealerships, which follows Tesla's disruptive sales model. The direct to consumer sales model has also been adopted by Volvo and Geely's new electric-only brand Polestar. The new Polestar 2 EV is built in China by Geely.

Last month, Geely and Volvo Cars announced plans to combine their powertrain operations in a new joint venture company. The joint venture will develop electric, hybrid, as well as internal combustion engine powertrains.

The two automakers said they will share electric vehicle architectures, autonomous driving technologies and jointly procure components to save costs. Volvo and Geely will also jointly source EV batteries and electric motors from suppliers. 

Although China is the world's biggest auto market, China's legacy automakers have not yet introduced many upmarket electric models to compete with luxury cars imported by Tesla, BMW, Mercedes Benz or Cadillac. Although there is no shortage of inexpensive electric models for sale.

The compact Hong Guang Mini EV is being built as part of a joint venture between SAIC and U.S. automaker General Motors starts at US$4,500 in China and outsells the Tesla Model 3.

However, China's new EV startups including NIO Inc. and Xpeng are targeting Tesla in China. Xpeng's P7 sedan, for example, is positioned as a Tesla Model S and Model 3 rival, with advanced technology including autonomous driving capability for about half the price of Tesla's Model S in China.

Geely's domestic rivals including Great Wall, and SAIC Motor have also rolled out new standalone EV brands.

Great Wall announced in Dec 2020 that it will launch a new premium standalone brand, coded the "SL project", for electric and smart vehicles. While SAIC announced this week its will introduce new electric models under its newly formed "R-TECH" brand.

Chinese automotive news publication Gasgoo reported that SAIC invested over 20 billion yuan ($3.07 billion) to develop the R-TECH brand. The brand will include sport utility vehicles and sedans, which will be battery electric vehicles or extended range electric vehicles that allow drivers to charge their cars with electricity or gasoline.

Reuters sources also said that Geely will launch new sales and marketing strategies to seek deeper relationships with the EV buyers, including  lifestyle lines for clothing and accessories, which are the same tactics used by Nio to lure in tech savvy buyers.

Zeekr is also considering rolling out a shared ownership plan that allows customers to become shareholders of Lingling, which management hopes will boost sales and the relationship between brand and customers.

China plans to be the world's leader in the adoption of EVs. The Chinese government has heavily promoted new energy vehicles (NEVs) which include fully-electric, plug-in hybrids and fuel cell models as a way to help clean up China's air pollution and fight climate change.

China forecasts NEVs will make up 20% of its annual auto sales by 2025 from around 5% in 2020. Sales data from last year reveals a growing market for EVs in China.

Although total retail sales of passenger cars fell 6.8% last year to about 19.3 million units, sales of NEVs rose by 9.8% to around 1.1 million vehicles, according to data from China's Passenger Car Association.

Eric Walz

Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.