Geely Still Bets On ICE While Embracing EV Growth

Words of Akio Toyoda seem to be echoed by Geely Auto’s CEO Gui Shengyue. Recently, the exec urged the industry to prioritise profitability by continuing to produce combustion (ICE) vehicles, despite the rapid growth of electric vehicle (EV) sales. He also highlights the ongoing importance of ICE cars as a significant revenue driver.

Gui further stated that electric cars do not entirely reflect the transition of the automotive sector, hence carmakers will lose a profit growth engine if they stop producing ICE cars. He expects ICE vehicles to account for 30% of global auto sales due to varied consumer preferences and insufficient EV charging infrastructure.

Hybrid vehicles, which use both battery power and fuel, are projected to capture the bulk of the market at 40% while pure EVs are expected to take 30%.

Gui also emphasised that future ICE cars must be fuel-efficient and intelligent to align with global emissions reduction goals.

This outlook from China’s second largest vehicle brand’s CEO contradicts forecasts of near-total EV dominance like what Nio’s CEO William Li recently predicted where EV adoption in China would exceed 90% by 2027.

China’s EV market meanwhile is on the surge, with pure electric and hybrid cars making up 65% of global sales in the first half of 2024, supported by government subsidies. Despite this, petrol cars represented 48% of new vehicle sales in Nov, reflecting ongoing demand.

Geely delivered 1.59 million vehicles in the first 11 months of 2024, a 26.1% year-on-year increase. Pure EVs accounted for 25.4% of sales, while hybrids made up 14.1%. The company expects to deliver 820,000 petrol cars in 2024, a 1% rise, bucking the national trend of declining ICE sales.

Market leader BYD sold 3.3 million EVs in the same period, yet profitability remains elusive for many EV makers due to high costs and intense price competition. Only a few, including BYD and Li Auto, have managed consistent profits.

Geely’s Chairman Li Shufu recently reorganized the company's auto portfolio, selling off shares in Geely Hong Kong owned Zeekr and Lynk to fund Geely's growth. Li Shufu through his private investment arm Geely Holding Group owns Volvo Cars, a stake in Daimler and 49.9% of Malaysian carmaker Proton.

This strategy highlights Geely’s dual focus on maintaining ICE profitability and expanding its EV portfolio in a rapidly evolving market.