Credit：Visual China

Zeekr, an electric vehicle (EV) brand owned by Geely, has obtained approval to issue up to 926,074,300 common shares on the New York Stock Exchange, the China Securities Regulatory Commission (CSRC) disclosed in late August. Soon after the regulatory green light, Zeekr initiated a roadshow to test investors’ appetite for its proposed listing three week ago, Chinese news media outlet Jiemian reported. If the EV company raised more than $1 billion through its initial public offering (IPO) as desired, that would be the largest listing by a Chinese issuer in the U.S. market since ride-hailing giant Didi Chuxing amassed $4.4 billion in June 2021.

Zeekr is highly likely to launch the IPO, several investors told Jiemian. That means Zeekr is set to be the first Chinese firm to go public in U.S.in three years as well as the last emerging Chinese EV startup to launch IPO in U.S. Jiemian suggested Zeekr is undergoing a listing with an unusual speed as it noted evenat the most active period at the capital market, Nio Inc, the fastest domestic peer of Zeekr, has spent four years for IPO.

Zeekr still focuses on foreign investors during its roadshow and has not talked with investors in mainland China and Hong Kong yet, Jiemian cited an investor close to the roadshow. As of the beginning of this month, Zeekr has reportedly started meeting with some of investment institutions in Singapore and Europe to try to attract potential investors. Given results of the preliminary meeting, Zeekr was expected to be valued at $18 billion in its U.S. listing, roughly equivalent to the current market capitalization of U.S.-listed Nio. Zeekr got a more-than-expected valuation, Jiemian cited some investors in the EV sector. The IPO valuation was 38% more than the $13 billion of post-money valuation after Zeekr completed a &750 million pre-A round funding in February. The possible IPO valuation was also more than the reported value. Reuters reported in August that Zeekr’s share sale would yield a valuation of over $13 billion, the same as that achieved in the founding round in February.

Judging from the valuation model, Zeekr is still regarded by investors as a technology company, instead of a traditional vehicle manufacturer, an industry insider told Jiemian. The insider said the industry’s valuation basis for Zeekr at the moment is 2 to 3 times the price-to-sales (P/S) ratio, which suggests the Wall Street effectively added Zeekr in the leading player club and is bullish on its valuation. The median P/S ratio of U.S.-listed automakers is 0.81, while all the traditional manufacturers such as Toyota, Honda, Stellantis and Zeekr’s parent Geely have less than 1 times P/S ratios.

Zeekr’s IPO effort came as a number of EV makers joined in new round of price war in China. Tesla announced on August 14 that it reduced the starting prices for certain Model Y long-range and performance versions by RMB14,000 (US$1,935), or down 4.5% and 3.8%, in China. Following the second round of price cuts in the second half of the year, two versions now cost as low as RMB299,900 and RMB349,900, respectively. Besides Tesla, at least 10 Chinese automakers announced price cuts for their EVs in August. Zeekr that month slashed price by RMB30,000 to RMB37,000. Leapmotor announced price cut between RMB10,000 and RMB20,000, and Changan Ford offered promotional package including one-time price cut of RMB40,000.

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