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Just over a week after the "too fast new product launch, backstabbing car owners" storm, on the evening of August 21, Zeekr released its second quarter of 2024, which is also its first financial report after listing. This quarter, Zeekr delivered 54,811 vehicles, a year-on-year increase of 100%, setting a record for the best first quarter performance since the brand started delivery. Driven by the surge in sales, after excluding the impact of share-based payments under Hong Kong accounting standards, Zeekr had a net loss of 70 million yuan in the first half of the year, and turned losses into profits in the second quarter.

On the afternoon of August 21, at the interim results conference of parent company Geely Automobile, Zeekr CEO An Conghui was confronted in a non-home setting and was directly asked how he felt about launching new models twice in half a year, a problem of "backstabbing old car owners".

"I think everyone will ask this question today," An Conghui said, "How to properly resolve the relationship between product iteration and old users is a difficult but correct thing to do."

Zeekr turned a profit ahead of schedule in the second quarter

According to the financial report, Zeekr's second-quarter operating income exceeded 20 billion yuan, a record high for a single quarter, a year-on-year increase of 58%, a month-on-month increase of 36%, and a gross profit margin of 17.2%. In the first half of this year, Zeekr's total revenue was nearly 35 billion yuan, a year-on-year increase of more than 60%.

Behind the revenue growth is the continued growth in delivery volume. Since 2022, Zeekr's monthly sales volume has been on a very stable upward trend. In June this year, Zeekr's sales exceeded 20,000 vehicles, and Zeekr's monthly sales volume has also approached 15,000 vehicles.

Zeekr's continuous expansion of its product matrix has become an important factor in driving sales: it will begin delivering the luxury flagship MPV Zeekr 009 in early 2023, will begin delivering the urban all-round SUV Zeekr X in mid-2023, and will begin delivering the luxury pure electric sedan Zeekr 007, which is smaller in size than 001, at the end of 2023.

In terms of profitability, Zeekr, which is still in a loss-making state, turned losses into profits in the second quarter of this year after excluding the impact of share-based payments. From 2021 to 2023, Zeekr's net losses were 4.514 billion yuan, 7.655 billion yuan and 8.264 billion yuan respectively, and the cumulative losses in the past three years reached 20.433 billion yuan.

"After turning a profit in the second quarter, Zeekr's gross profit margin is expected to continue to increase in the second half of this year." In the post-earnings conference call, Zeekr's management said that compared with other automakers, Zeekr relies on Geely's 33 years of experience in car manufacturing and has the effects of scale and platformization. Zeekr has used Geely's existing production capacity many times, so it has more advantages in OEM costs.

Regarding the previously proposed annual delivery target of 230,000 units, the above-mentioned management said, "Although we are facing some pressure, we are still confident and expect to deliver 25,000 units per month from September to December this year to achieve the target."

At present, the iteration of Zeekr 001, Zeekr 007 and Zeekr 009 has been completed. The above management expects that the order growth of the three models is expected to exceed 30%. After the new car was released last week, the clues and test drives set new highs, and the order volume also increased by more than 30%.

In addition, the Zeekr 7X and Zeekr Mix models will be launched in September and October, which will also support the growth of Zeekr's sales this year. In terms of overseas markets, after two years of cultivation, Zeekr's overseas market sales will increase significantly in the third quarter of this year, supporting the increase in Zeekr's delivery volume.

Zeekr is not willing to be the first to come forward for the time being

On the day Zeekr released its financial report, its parent company Geely also released its second quarter financial report this year. On the afternoon of August 21, at the interim performance press conference of its parent company Geely Automobile, Zeekr CEO An Conghui was asked how he felt about "backstabbing old car owners."

"I thought everyone would ask this question today." An Conghui said frankly, "The rapid iteration of Zeekr products broke the industry practice. In fact, there was pre-communication with users before the new product was released, which also caused complaints and spitting from users. How to solve the relationship between product iteration and old users in the future is a difficult but correct thing to do."

However, An Conghui also wanted to calm the public opinion storm as soon as possible and maintain a good relationship with old users. He comforted the old car owners at the performance briefing: "The new Zeekr 009, as well as the 2025 Zeekr 001 and Zeekr 007, will not have any annual model iteration plans within the next year from the date of product release."

In addition, An Conghui said that the Mobileye intelligent driving system used by Zeekr in the early stage will continue to be developed and iterated. Products with the Mobileye intelligent driving system will be retained in China, and all products overseas will use the Mobileye intelligent driving system.

As a major consumer product, in the era of traditional fuel vehicles, the cycle of major model changes was often 5 to 6 years. New energy vehicle brands have shortened this cycle to one year, which is comparable to the iteration speed of smartphones.

However, this time, Zeekr 001 was iterated twice within half a year, and the price was reduced while the quantity was increased. This extraordinary operation eventually triggered many old Zeekr owners who had just received their cars to defend their rights. However, judging from An Conghui’s response at the performance briefing, whether the previous extraordinary rapid iteration was intended to allow users to use better products faster, or to face performance pressure after listing and quickly grab market share, Zeekr does not plan to be the "first bird" in the future.