Morgan Stanley has resumed coverage of Hong Kong-listed Geely with an overweight rating on expectations the Chinese automaker can weather macro and industry uncertainties. Fierce competition in China’s new energy vehicle market, which includes battery- and hybrid-powered cars, has increasingly forced automakers to cut prices and add features if they are to survive. Many of the companies have launched overseas expansion strategies to tap new revenue sources, but rising trade tensions with the U.S., and, more recently the European Union, have added challenges. “We see Geely as a beneficiary of market consolidation,” Morgan Stanley Asia equity analyst Tim Hsiao and a team said in a June 25 report that resumed coverage of the stock. “Geely has said it has limited exposure to the EU, except for PHEV exports under Lynk & Co (which are not affected by the tariff hike currently) and potential overseas expansion for Zeekr (which will start at a minimum level),” the report said. PHEV is the acronym for plug-in hybrid electric vehicle. Hangzhou-based Geely entered China’s auto industry in 1997 and is known for acquiring Volvo in 2010. Geely has a wide number of other subsidiaries, which include Polestar, Lynk & Co. and the electric car brand Zeekr that listed in New York earlier this year . Morgan Stanley’s analysis showed that Geely climbed from its yearslong fourth place ranking into third place last year by China market share, behind one of Volkswagen’s joint ventures in the country. BYD held first place, a position it’s held since 2022, up from 13th place in 2021, the analysis showed. In 2020, BYD launched the Blade battery , which many argued helped spark the company’s growth in EVs. Geely on Thursday announced it had developed its own competitor, the lithium iron phosphate “Aegis Short Blade Battery,” which it claims passed above-industry standard tests without exploding. The company also claimed the new battery can be used for 50 years, which can support secondhand sales. The company plans to initially use the battery in its own vehicles this year. The majority of Geely’s cars are still traditional internal combustion engine vehicles. But the company raised the share of its new energy vehicles to 32% so far this year, higher than peers such as Great Wall Motor, for which the share is 23%, the Morgan Stanley analysts pointed out on
CNBC
The full article is available here. This article was published at CNBC Finance.
Comments are closed for this article!