Geely: Pure play BEV manufacturers are losing money, will maintain diversified strategy, 2023 profit is higher than expected

Geely Automobile Holdings Group posted a higher-than-expected profit of 5.31 billion Yuan (~RM 3.46 billion) in 2023, up 1 percent from the year before, despite intense price war in China. Analysts had expected Geely to post a lower profit figure of 4.9 billion Yuan (~RM 3.2 billion), according to Bloomberg.

Geely also said if its one-off spending to acquire 34 percent of Renault Korea is removed, its profit would’ve increased by 51 percent.

Revenue climbed 21 percent to 179.2 billion Yuan, also beating expectations.

Geely Automobile Group, not to be confused with the holding company Zhejiang Geely Holding Group, comprises the company’s namesake Geely Auto brand, as well as Proton, Lotus, Zeekr, and Lynk & Co, but excludes Volvo and Polestar.

Geely Automobiles’ group-wide deliveries for 2023 came in at 1,686,516 units, up 18 percent from the year before. Sales in domestic China alone is up 14 percent (1,412,415 units), while exports are up 38 percent (274,101 units).

Deliveries of plug-in hybrids (PHEVs) and BEVs (collectively referred to in China as new energy vehicles, or NEVs) are up 48 percent, reaching 487,461 units, or about one third of the group’s total sales.

Sales of the battery EV (BEV) only Zeekr brand was up 65 percent, to 118,685 units.

In a separate report by Nikkei Asia, Gui Shengyue, CEO of Geely Automobile Holdings Group repeated a comment first made by Geely’s chairman Li Shufu, who said the price wars in China are affecting pure BEV manufacturers more than diversified powertrain manufacturers like Geely.

In an interview with China’s state-owned news channel CCTV, Li said Geely is "not going to easily give up" on internal combustion engine (ICE) cars, explaining that combustion engine cars provide stability to China’s automotive industry.

Despite rapid growth in sales of PHEVs and BEVs, regular combustion engine cars still contribute over 70 percent of Geely Automobile Holdings Group’s total deliveries last year.

Also read: Hurt by price wars, Chinese automakers now question if China has gone too deep into BEVs

Among China’s NEV-only companies, only BYD and Li Auto are profitable. Both rely heavily on PHEVs, which still use combustion engines. PHEVs contribute 45 percent of BYD’s total deliveries last year, while Li Auto’s product line-up are all E-REVs, except for the BEV Li Mega.

E-REVs, or extended range electric vehicles, are a subset of PHEVs. The only difference is that a PHEV’s combustion engine can drive the vehicle directly, but E-REVs use their engines solely as a generator. This allows the engine to run at a constant, most fuel-efficient rotational speed for charging the battery. This dual-power source feature is useful for long distance driving, allowing drivers to skip long queues at charging stations.

Chinese BEV-only manufacturers such as XPeng and Nio are still operating at a loss. Volvo has since transferred its money-losing BEV-only Polestar brand to Geely, and Geely has also delayed the public listing of its BEV-only Zeekr brand.