ZEEKR Intelligent Technology - Earnings Call - Q1 2025
May 15, 2025
Transcript
Operator (participant)
Hello, ladies and gentlemen. Thank you for standing by for Zeekr Group's First Quarter 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. Today's conference call is being recorded. I will now turn the call over to your host, Mr. Jing Yuan, the CFO of Zeekr Group. Please go ahead.
Jing Yuan (CFO)
Thank you, Operator. Good day, everyone. Welcome to Zeekr Group's First Quarter 2025 Earnings Conference Call. Before we continue, please be reminded that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the view expressed today. Further information regarding risks and uncertainties is included in certain company filings with the U.S. Securities and Exchange Commission. The company does not take any obligation to update any forward-looking statements except as required under the applicable law. Joining us today from Zeekr Group Senior Management, Mr. An Conghui, Co-founder and CEO, and myself, Jing Yuan, the Group CFO. Our CEO will make his remark in Chinese followed by an English translation.
People sending the call to me for a review of our financials, and I will talk about our financials in English. With that, I will now turn the call over to our CEO, Andy. Please.
Conghui An (CEO)
[Foreign language]
Hello everyone, thank you all for joining Zeekr Group's First Quarter 2025 Earnings Call.
[Foreign language]
First and foremost, I would like to extend my heartfelt thanks to our users, employees, and partners. Over the past four years, your unwavering support and long-term trust have made it possible for us to achieve what once seemed impossible. With the Zeekr 001, we transformed the shooting brake from a niche segment into a mainstream option for our customers, ushering in a new era for this category in China. Meanwhile, the Zeekr 009 took the luxury segment by storm, becoming the top-selling model in the over RMB 400,000 luxury MPV category and pioneering a new market for premium pure electric MPVs. Thanks to your belief in us, Zeekr has reached nearly 500,000 users worldwide, carving out a third pass in the new era of intelligent electric mobility.
[Foreign language]
As of the end of the first quarter, following the strategic integration of Zeekr and Lynk & Co brands, Zeekr Group's global user base surpassed 1.9 million, and yes, rapidly approaching the 2 million mark. Looking ahead, we will continue to redefine luxury through exceptional service and elevate the premium automotive segment with cutting-edge technologies. Amid the industry's transformation, we remain firmly committed to innovation as we expand our presence in the global premium market.
[Foreign language]
Since February, after we integrate both Lynk & Co brand and Zeekr brand into Zeekr Group, Zeekr Group has driven progress through a series of strategic initiatives, including joint product R&D, upgrade to our manufacturing systems, enhanced user engagement, and stronger coordination across domestic and international channels. These efforts have accelerated platform-based technology sharing and unlocked economies of scale, generating a notable improvement in profitability. From January to March, Zeekr Group delivered 114,000 vehicles, marking a 21% year-over-year increase and solidifying our position among the leaders in China's premium EV segment. Zeekr Group's first quarter revenue reached RMB 22 billion, with vehicle revenue up to RMB 19.1 billion. Vehicles gross margin reached an impressive 16.5%, with the Zeekr brand margin rising to 21.2%.
[Foreign language]
Next, let me outline our three key areas of focus for driving sustained growth: product, technology, and channel expansion.
[Foreign language]
Let's begin with our product lineup. In line with our brand strategies, that is, elevating the Zeekr brand in the premium segment and expanding the Lynk & Co brand's market reach, we have further enriched our product portfolio and enhanced the overall competitiveness. As high-end premium and hybrid vehicles emerge as key growth engines in China's auto market, we are actively adapting to the evolving landscape. The Zeekr brand continues to make bold strides in the premium space. In April the 15th, we launched the Zeekr 7GT, a high-tech shooting brake coupé, further strengthening Zeekr's shooting brake family. We produced over 10,000 Zeekr 7GTs for delivery in the model's first month. The Zeekr 009 Grand Collector's Edition, bolstered by the high-profile endorsement, has quickly become a sought-after choice among top-tier buyers.
Furthermore, the Zeekr 9X, positioned as the new energy era's most luxurious flagship SUV, is worth the first super electric hybrid model built on a full-stack 900-volt high-voltage architecture. The entire lineup delivers 0-100 kph acceleration in just 3 seconds. Its groundbreaking super electric hybrid technology, which we began developing three years ago, seamlessly combines the advantages of a pure electric plug-in hybrid and the range extender systems. This enables a driving experience comparable to that of a pure EV, without any worry of range anxiety. By strategically tapping into both electric luxury and hybrid segments, the Zeekr 9X captured widespread attention from global media outlets, industry peers, and consumers at its Shanghai auto show's debut.
[Foreign language]
Meanwhile, the Lynk & Co brand continues to solidify its presence in the premium segment while broadening both the powertrain lineup and the customer base. Following the strategic integration, we launched the Lynk & Co 900 in April, a smart six-seater flagship SUV powered by EM-P hybrid technology. The delivery volume of the Lynk & Co 900 has surpassed that of the models with highly publicized pre-orders in the market. This model has secured far over 30,000 pre-orders to date, and the order data shows strong demand for the high-spec 2.0 Turbo Ultra model. 80% of our customers choose that variant, and particularly among the users upgrading or replacing their existing models. Notably, over 30% of the orders are from former Mercedes-Benz, BMW, and Audi drivers, highlighting the Lynk & Co 900's solid performance both in terms of the sales volume and premium market appeal.
[Foreign language]。
I understand that many investors are very interested about our future product offering. Looking ahead, Lynk & Co will launch its first EM-P mid-to-large sedan in the second half of this year, while Zeekr Group will roll out the Zeekr 9X and another large luxury SUV, 8X, in the third and the fourth quarter respectively, both equipped with the cutting-edge super electric hybrid technology. This compelling lineup of competitive, highly differentiated models promises to inject fresh momentum into our business and fuel the group's sustainable, steady growth.
[Foreign language]
Secondly, on technology, in response to the Tiger declaration and to accelerate its implementation, we are systematically advancing the integration and sharing of key platform technologies across the Zeekr and Lynk & Co brands, including the vehicle architecture, electrical and electronic architecture, powertrain systems, intelligent driving assistance, and the smart cockpit technologies. We aim to build a strong technological motor through the coordinated efforts across both brands.
[Foreign language]
In the era of intelligent driving, Geely has unified its approach across brands and officially launched its standard, intelligent driving assistance solution, that is, G-Pilot. Future, the Zeekr Group models will feature the G-Pilot H7 and H9 systems. Among them, the Zeekr 9X will be equipped with the G-Pilot H9 system and offer the level 3, ready intelligent driving assistance capabilities. It is expected to enter the mass production and delivery by the end of this year. Meanwhile, the newly launched Lynk & Co 900 incorporates the advanced G-Pilot H5 and H7 systems. It's also the first production model to feature NVIDIA's Drive AGX Orin platform and comes equipped with the Geely Advanced Evasion System or GAES, a continuous automatic evasive steering technology originally debuted by the Zeekr brand.
In the second half of this year, Lynk & Co's upcoming EM-P mid-to-large sedan will also be equipped with NVIDIA's Orin chip SoC and adopt the G-Pilot H7 platform. To simply put, we will find a very good synergy in the area of ADAS for both Zeekr and Lynk & Co brands.
[Foreign language]
In the smart cockpit terrain, Zeekr and Lynk & Co will share domain controllers and electrical and electronic architecture. Each brand will maintain its distinct user experiences at application level. Zeekr vehicles will continue to use Zeekr AIOS, whilst Lynk & Co will use Flyme Auto. So, to simply put, the two brands will share a lot in common but still have different applications.
[Foreign language]
In EV battery technology, Zeekr Group's self-developed Golden Battery has ushered in a new era of ultra-fast charging for lithium iron phosphate batteries, becoming the first LFP battery to surpass all mass-produced lithium batteries in charging speed. It is now one of the fastest charging batteries in production globally. Moving forward, the original Golden Battery will be unified under the Shield Golden Battery and will incorporate advanced in-house cell technologies developed by the Geely Holding Group. This upgraded battery platform will further enhance the growth of both Zeekr and Lynk & Co brands in 2025 and beyond.
[Foreign language]
Building on this foundation, we are pushing the boundaries of charging technologies even further. Zeekr Group has officially launched the V4 Ultra Fast MW charger, which boasts a world-leading peak single gun output of 1.3 MW. The first station is already built up and running in the city of Hangzhou, delivering a total power output of over 1,400 kW, sufficient to support simultaneous ultra-fast charging for three 800 volt models across Zeekr and Lynk & Co brands. In fact, our customers are giving very positive feedback about their experiences of charging at the station, and we will soon expand this technology across the nation.
[Foreign language]
Furtherly, the global channel development. Domestically, we would continue to strengthen our store network and expand into more lower-tier markets. Zeekr would leverage Lynk & Co's channel resources to aggressively expand into lower-tier markets, sharing after-sales service infrastructure, improving accessibility for users, and significantly boosting the Zeekr brand's overall channel coverage.
[Foreign language]
Internationally, we are accelerating our global expansion to drive continued sales growth. Beyond Europe, we plan to establish a unified sales company in the global markets with a single team focused on developing international markets for both brands. Currently, the Lynk & Co 08 EM-P and the Zeekr 7X are being shipped overseas. On the 16th of May, the Zeekr 7X will do commercial deliveries in Europe. As of the end of April, we have entered over 60 major international markets with a global retail footprint of over 1,200 stores, over 150 of which are located in the overseas markets spanning Asia, Europe, Oceania, Latin America, and Africa. I believe that the Lynk & Co 08 and the Zeekr 7X will have a very good market performance in the global market because they are in the large segment and we already receive positive feedback from the customers.
[Foreign language]
In conclusion, we believe that only those who embrace the change can move forward, only those who innovate can grow stronger, and only those who reform and innovate will ultimately succeed. Since the first quarter, we've been implementing internal management reforms to unlock greater efficiency, enabling both innovation and breakthroughs. Going forward, we remain committed to our clear long-term approach by aligning with the trends of the new energy era and focusing on the global premium markets. We will drive success amid the ongoing transformation of the global automotive industry.
[Foreign language]
With that, I would hand over the call to our CFO, Mr. Yuan Jing. Thanks, everyone.
Jing Yuan (CFO)
Thank you, Andy. I will now go over our key financial results for the fourth quarter of this year. Given the time constraint, I will focus on the highlights here and would ask you to refer to our earnings press release and sixth day announcements for further details. We are pleased to report a robust financial performance for the fourth quarter, our fourth full quarter since completing the strategic integration of Zeekr and Lynk & Co. Our strategic initiatives delivered both improved profitability and sustained growth across all key metrics. We have reached strong revenue growth and record margins. Our total vehicle deliveries reached 114,011 units in fourth quarter 2025 for a year-over-year growth of 21.4%. Meanwhile, enhanced product competitiveness and stronger brand synergies drove a 16.1% year-over-year increase in vehicle sales revenue as well.
We also achieved another record high quarterly vehicle margin through disciplined supply chain management and scale advantages. Our overall vehicle margin rose to 16.5%, up 3.4 percentage points year-over-year, and beating the guidance of 15% set by management at the beginning of this year. The Zeekr brand led the way with an all-time high margin of 21.2%, while Lynk & Co's margin reached 11.4%, reflecting our ongoing focus on cost optimization and premium product mix enhancement. Gross margin was 19.1% for the fourth quarter, compared with 16.3% for the fourth quarter last year and 18% for the fourth quarter of 2024. We have achieved improving operating efficiency and significant loss reduction. We leverage platform-based R&D and optimize resource allocation to improve operational efficiency while expanding our vehicle lineup.
R&D expenses will remain be RMB 2.9 billion for the fourth quarter of 2025, representing an increase of 25% year-over-year by the decrease of 25.6% quarter over quarter, exceeding our savings targets of 20% set at the beginning of this year. SG&A expenses will remain be RMB 2.65 billion for the fourth quarter of 2025, representing a decrease of 9.2% year-over-year and a decrease of 35.8% quarter-over-quarter. Together, higher revenue and improved spending efficiency narrowed down our net loss by 60% year-over-year to remain be RMB 763 million for the fourth quarter of 2025. A major step towards sustainable profitability. Before we move to the Q&A session, I would like to address that in order to ensure compliance with these cordial regulations and to prevent inappropriate or misinterpreted remarks from affecting the pending privatization transaction, the company will not comment on matters related to the privatization offer we received.
A special committee composed of independent directors has been established to evaluate the offer, and all communications with the offer will be conducted by this committee. The company will make announcements at an appropriate time in accordance with legal disclosure requirements. For updates on privatization offer, please refer to the company's official disclosures. That concludes my prepared remarks. Thank you, everyone. Let's move on to Q&A.
Operator, could you read the Q&A instructions? Thank you.
Operator (participant)
We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. For the benefit of all participants on today's call, if you raise your question in Chinese, please immediately repeat your question in English. At this time, we'll pause momentarily to assemble our roster. The first question comes from Tina Hou with Goldman Sachs. Please go ahead.
Tina Hou (VP and Head of China Autos Equity Research)
Hi, thanks management for taking my question. I have two questions. The first one is regarding the first four months sales volume, wondering if it's in line with management expectation. Do we have an updated sales volume target for 2025 full year, and what would be the main models that's driving us to that full year target? The second question is, I would just like to see if management has any comments regarding the Geely Auto's provisional offering. We've also noticed that the share price of Zeekr is already above the offering price, so just wondering what kind of comments, if any, management has on anything that you can share. [Foreign language]
Conghui An (CEO)
[Foreign language]
Thank you so much for your questions from the Goldman Sachs analyst colleague, and we acknowledge that our sales performance in April is not that satisfying, and some might find some might, but we would say that the sales performance is actually in line with our management expectation. We can say that we stay committed to the sales targets of 320,000 vehicles of Zeekr brand this year and 390,000 vehicles for the Lynk & Co brand this year. We stay committed to the 710,000 vehicles of sales volume for the Zeekr Group this year.
[Foreign language]
We did not have any new product launch in the first quarter, and that has some influence on our sales performance in the first quarter. We did not change our sales business policies in the first quarter, and that also placed a stress on our sales performance in the first quarter as well. I think since April we launched the new Zeekr 007 GT as well as the Lynk & Co 900, we would have a positive sales performance in May. I believe in the rest of this year with the launch of Zeekr 9X and Zeekr 8X and Lynk & Co's mid to large size sedan, these new products would contribute to the healthy positive sales performance in the remaining of this year.
[Foreign language]
You might have learned from the media reports that we already recently made some change in the organization among the Zeekr Group's marketing and sales units, and we are also actively expanding our network approach. In addition to the Zeekr House we already have, we also introduced the Zeekr agent mode for us to quickly enter into more low-tier markets. We have been working on this for over three months, and I think we can see positive results from this move in Q3 and Q4 this year.
[Foreign language]
To answer your second question, I also would like to say that it's a difficult question and as a matter of fact I'm not the board member of Geely Auto 0175 in Hong Kong and I also learned the move from the public filing. To ensure the compliance with the disclosure regulations and to prevent inappropriate remarks from affecting the pending privatization transaction, the company would not comment on the matters related to the privatization offer here.
[Foreign language]
Of course our company takes the privatization offer very seriously, so a special committee composed of independent directors has been established to evaluate the offer, and all communications with the offer will be conducted by this committee. The company will make announcements at appropriate times in accordance with the legal disclosure requirements. For updates on the privatization offer, please refer to the company's official disclosures. During the period of time, if there's any need from our investors, our company's management will give our full support possible.
[Foreign language]
After the filing, the publish of the filing by the Geely Auto 0175 and also today at the, me, the conference meeting, I also had a conversation with Geely Auto 0175 Board Members. If any Zeekr Investors want to further have a conversations, we would give support and make the lines.
[Foreign language]
If our investors would like to have a conversation with our special Committee Members, our Independent Directors, we can also make the contact for you.
[Foreign language]
Thank you so much for your understanding.
Tina Hou (VP and Head of China Autos Equity Research)
[Foreign language]
Operator (participant)
Your next question comes from Tim Hsiao with Morgan Stanley. Please go ahead.
Tim Hsiao (VP and Equity Research Analyst)
[Foreign language] So my question is about the product because Zeekr's first large hybrid SUV 9X has received great feedback since the debut at the Shanghai Auto Show. How should we think about the volume contribution and the margin of this model into the second half, and in the meantime, it would be great to get some feedback or some additional color about the new models on Zeekr 8X in the fourth quarter. Thank you.
Conghui An (CEO)
[Foreign language]
so before answering your questions I would like to add two points in the to respond to the Tina's question so first of all after we launched the 007 GT on the 15th of May we already achieved 10,000 delivery so that shows that this model wins the customer's recognition well and the last month in April we also launched the 009 Grand Collectors Edition and also we received the orders far exceeded our previous expectation for the Lynk & Co
900 we also received a very high number of orders intake so our factories are working overtime to ensure timely deliveries to our customers. Based on this very positive market performance of these three models we launched recently, we have confidence that we can achieve ourselves target this year.
[Foreign language]
To respond to your question on the Zeekr 9X and the Zeekr 8X, I think these two models have a very unique and good positioning and both models are positioned at luxury segments and they would both be equipped with a super electric hybrid powertrain. There is a big potential for both models and after the debut of Zeekr 9X at Shanghai Motor Show, we have received very high attention from the global media outlets and the industry and our customers.
[Foreign language]
The Zeekr 9X as well as the Zeekr 8X have very very strong performances. Zeekr 9X would be worth a first 900 volt equipped with a 900 volt technologies vehicle model and yet would support the fastest charging speed and the longest pure drive EV driving range and the fastest acceleration and this is a very unique SUV model in its segments. Powered by the super electric hybrid technology, it combines the good advantage of a pure EV powertrain, the plug-in hybrid powertrain, and the range extender powertrain. I think this technology would be very leading in the new energy vehicles sector.
[Foreign language]
The Zeekr 9X would be the leader in the application of smart active chassis technologies as well as the level three capable assist driving technologies, so it would become the benchmark in the full-size luxury SUV.
[Foreign language]
The length of Zeekr 9X is between 5.2 meters-5.3 meters whilst the length of Zeekr 8X will be around, will be over 5 meters, so they share a lot of technologies in common but in different sizes so they can target different segments.
[Foreign language]
According to our calculations, the Zeekr 9X and the Zeekr 8X would have a quite impressive margin performance and they would offer higher vehicle margin of the current level of the current vehicles.
[Foreign language]
From our perspective, in the large vehicles segment, the EV sales growth would not be as high as before, whilst the super electric hybrid would have a very good potential not just in the Chinese market but also in the global overseas market including like Europe, the GCC countries, as well as the Southeast Asia markets.
[Foreign language]
We are in parallel developing our domestic product for our domestic markets as well as for the international markets, aiming to timely deliver them to the global customers.
[Foreign language]
thank you
Tim Hsiao (VP and Equity Research Analyst)
[Foreign language]
Jing Yuan (CFO)
yeah but one last question I think you know we're about to approach the time thank you.
Operator (participant)
Your next question comes from Ming Hsun Lee with Bank of America. Please go ahead.
Ming Hsun Lee (Managing Director, Equity Research Analyst, and Head of Greater China Auto & Industrials)
[Foreign language] so Zeekr has developed the super hybrid technology and compared to the current PHEV cars or EREV cars in the market what is the major advantage for this new technology and based on your expectation how much extra volume sales you expect after you provide the the super hybrid version of your new models and in the future will you also consider to provide the hybrid version for your existing models or it will be mainly for the models in the future
Conghui An (CEO)
[Foreign language]
so first of all Lynk & Co 900 is using the EM-P powertrain system which shares a lot of technology in common with Geely's powertrain system and when it comes to the mechanical architecture Zeekr 900 uses SPA Evo architecture, an upgrade of the previous SPA architecture, and when it comes to the Zeekr, when we develop the large size or mid to large size products, we would use a super electric hybrid technology which is different from the EM-P, and to differentiate the two brands.
[Foreign language]
so I would like, I have already introduced our super electric hybrid technologies, but I want to make at some point here, first of all on the power of our super electric hybrid technologies, no matter when the battery is fully charged or the battery is running out of electricity, our super electric hybrid technology can both provide the very good driving performance like any other top end luxury products, so better, beating the performance of existing PHEV or EREV products in the market.
[Foreign language]
secondly, on the fuel efficiency, no matter the wheels are driven by the e-motor or the drive directly from the gasoline engine, or no matter the vehicle is driving at high speed or low speed, we can always have a very good fuel efficiency.
[Foreign language]
so the charging, and so our super electric hybrid powered technology products will be equipped with battery pack of one variant with over 50 kWh and the other, another variant around 80 kWh, and our powertrain would be equipped with a 900 volt ultra fast charging technology, so we can support ultra fast charging, providing the best charging experiences to our customers.
[Foreign language]
and another very important competitive factor of our super electric hybrid technology is about the maintenance, the services, and so customers of our super electric hybrid products, they don't need to go into the maintenance as frequently as the other vehicles, and the cost for maintenance services will be much lower than our peers' products.
[Foreign language]
and we would share more details and information about our super electric hybrid technologies at the product and technology launch event later, but what I can say here is that we hope that our super electric hybrid technology will be the new benchmark, and our internal target was made when we registered the technology, the project is to contribute 150,000 vehicles-200,000 vehicles per year for this product, this powertrain product in the future.
[Foreign language]
thank you
Ming Hsun Lee (Managing Director, Equity Research Analyst, and Head of Greater China Auto & Industrials)
[Foreign language]
Operator (participant)
this concludes our question and answer session. I would like to turn the conference back over to Mr.
Yuan Jing, for any closing remarks,
Jing Yuan (CFO)
so thank you all for joining today's call, and as Ms. Dan mentioned earlier, you know, the management here is more than happy to facilitate any of your concerns or discussions with either the independent directors or, you know, our parent company, so if you need or have any other questions, please feel free to contact us or the group IR team. Have a great day, thank you, and bye-bye.
Conghui An (CEO)
[Foreign language]
Jing Yuan (CFO)
Thank you, thank you.
Operator (participant)
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.