Core Viewpoint - The Chinese electric vehicle (EV) market has seen significant growth in the first half of 2025, with Geely Automotive becoming the second-largest in new energy sales and Leap Motor achieving the highest sales among new forces. Both companies have surpassed one million units in cumulative sales, indicating a demand increase of approximately 100 GWh for battery supply [2][3]. Group 1: Market Dynamics - The growth in the EV market is largely driven by government policies promoting vehicle trade-ins, alongside a trend of "consumption downgrade," where lower-priced models are becoming the main sales drivers [2]. - Geely's new energy brand "Galaxy" has achieved over one million cumulative sales within 24 months, with a remarkable 232% year-on-year growth in the first half of 2025, selling 548,000 units [2]. - Leap Motor delivered over 220,000 units in the first half of 2025, surpassing competitors like Ideal and Xiaopeng, and has raised its delivery guidance for 2025 to between 580,000 and 650,000 units [2]. Group 2: Battery Supply Challenges - Geely is facing a battery supply shortage due to its rapid expansion, prompting the company to seek additional capacity from external suppliers [3]. - The establishment of the independent "Jiyao Tongxing" battery group aims to consolidate Geely's battery operations and enhance efficiency, with a target of achieving 70 GWh capacity by 2027 [3]. - Geely plans to adopt a "self-supply + external procurement" strategy, with an expected increase in self-supplied battery cells to 30% over the next two years [3]. Group 3: Leap Motor's Strategy - Leap Motor achieved a record gross margin of 14.1% in the first half of 2025, attributed to economies of scale and cost control [4]. - The company's strategy focuses on "full self-research" and decentralized procurement, allowing it to save costs and enhance bargaining power by sourcing battery cells from multiple suppliers [5]. - Leap Motor has begun supplying self-developed battery packs to over five new energy commercial vehicle clients, indicating a shift towards monetizing its battery technology [5]. Group 4: Opportunities for Battery Suppliers - The anticipated demand for 100 GWh of batteries presents both opportunities and challenges for battery suppliers, with CATL remaining a preferred choice but not the only option [5]. - Suppliers need to demonstrate stable performance, compatibility with vehicle models, and sufficient capacity to meet delivery timelines to secure orders [6].

Core Insights - The article discusses the competitive dynamics between Geely and BYD in the Chinese electric vehicle market, highlighting Geely's recent resurgence in the new energy vehicle segment, with a penetration rate of 51.5% and total sales of 1.409 million vehicles in the first half of the year, compared to BYD's 2.146 million vehicles [1][2][20] - Geely's CEO expressed confidence in closing the market share gap with BYD, which currently stands at 4 percentage points, down from 8 percentage points last year [1][2] - The rapid growth of Geely's Galaxy brand, which achieved sales of 643,000 vehicles in the first seven months of the year, is a significant factor in this turnaround, with a year-on-year increase of 556% [1][2] Geely's Strategy and Market Position - Geely's strategy involves closely mirroring BYD's successful approaches, including pricing and technology, with the Galaxy brand's EM-i hybrid system directly competing with BYD's DM-i system [2][5] - The company has shifted from a multi-gear hybrid system to a single-gear system to reduce costs and improve efficiency, which has allowed for better price positioning against BYD [5][6] - Geely's R&D investment has been optimized, with a total of 8.6% reduction in spending compared to the previous year, allowing for more efficient use of resources [6][20] Product Offerings and Market Segmentation - Geely's Galaxy brand focuses on the 50,000 to 150,000 yuan price range, with models like the Galaxy L6, L7, and E5 targeting direct competition with BYD's offerings [6][11] - The company aims to capture the 100,000 yuan market segment by addressing consumer pain points and enhancing product features, as seen in the Galaxy A7's competitive specifications [15][21] - Geely's approach includes a dual-channel sales strategy, with plans to expand its dealer network significantly by 2025 [19][20] Future Outlook and Challenges - Geely aims to achieve a 30% increase in overseas sales in the second half of the year, with a focus on expanding its presence in international markets [20][21] - The company faces challenges in balancing volume and profitability, particularly in the mid-to-high-end market, where the Galaxy E8 has underperformed [17][21] - Geely's future success will depend on its ability to innovate and differentiate itself from competitors like BYD while maintaining cost efficiency and market responsiveness [18][21]

Investment Rating - The investment rating for Geely Automobile is "Buy" and is maintained [6]. Core Views - Geely Automobile reported a revenue of 240.19 billion yuan for 2024, representing a year-on-year increase of 34.0%. The total sales volume reached 2.177 million vehicles, up 32% year-on-year, with a net profit attributable to shareholders of 16.63 billion yuan, marking a significant increase of 213.3% year-on-year [2][4]. - The company is entering a new product era supported by the GEA architecture, with positive developments across its brands including Zeekr, Lynk & Co, and Galaxy. The transition to new energy vehicles is progressing smoothly, and the scale effect is expected to enhance profitability [2][4]. - The strong performance in Q4 2024, with revenue exceeding 70 billion yuan, reflects accelerated profitability from the new energy transition [7]. Summary by Sections Financial Performance - In 2024, Geely achieved a total revenue of 240.19 billion yuan, a 34.0% increase year-on-year. The sales volume was 2.177 million vehicles, up 32% year-on-year, and the net profit attributable to shareholders was 16.63 billion yuan, a 213.3% increase year-on-year [2][4]. - For Q4 2024, the revenue was 72.51 billion yuan, a 29.7% increase year-on-year and a 20.1% increase quarter-on-quarter. The sales volume in Q4 was 687,000 vehicles, up 31.9% year-on-year and 28.6% quarter-on-quarter [7]. Product Strategy - Geely plans to launch 10 new energy models in 2025, with significant releases from its brands. The focus on electric and intelligent vehicles is expected to enhance the driving capabilities of its models [7]. - The company is leveraging its new platform to support a new product cycle, with a strong emphasis on both electrification and intelligent driving technologies [7]. Market Position - Geely's new energy vehicle sales reached 342,000 units in Q4, achieving a penetration rate of approximately 50%, positioning the company among the top tier of new energy brands [7]. - The company maintains a solid foundation in fuel vehicles while exploring innovative overseas expansion strategies through joint ventures [7].