Whalesbook
Geely's Electric Turnaround
Geely Automobile Holdings Ltd. has become the world's best-performing electric vehicle stock, with shares jumping over 50%. This rally is driven by the company's successful shift from making traditional gasoline cars to a diverse electric mobility business. In contrast, rival BYD Co. saw only about a 7% share increase in the same period. Geely's growth is powered by record profits and strong sales in its new energy vehicle (NEV) segment. In 2025, Geely reported RMB 345.2 billion in revenue and RMB 16.63 billion in net profit, with a gross margin of 16.6%. NEV sales made up over 55% of its business in 2025, and NEV sales in the first quarter of 2026 hit 369,059 units, reaching a 52% electrification rate. Adding to its success, its premium EV brand Zeekr became profitable in the first quarter of 2025, a key step in boosting its value.
Analysts have sharply increased their earnings forecasts for Geely, with average estimates rising about 35% in the past year. Nearly all Chinese EV firms have a 'buy' rating on Geely. While Geely's 14-day Relative Strength Index is at 77.76, signaling potential overbought conditions, its forward P/E ratio of roughly 13x is attractive. This is much lower than BYD's P/E of about 28x, and also compares favorably to Geely's own five-year average. This lower valuation suggests investors are confident in Geely's transformation and its potential to grow its share in the global EV market.
Brand Diversity and Global Expansion Drive Geely
Geely's strength comes from its smart strategy of using multiple brands to reach different customers and technology choices, unlike BYD's focus on sheer volume. As the owner of brands like Volvo Car AB, Geely uses its global presence and experience with international brands to boost exports. In 2025, Geely exported 420,000 vehicles, with 124,000 being NEVs. The company's global push is speeding up, with exports in the first quarter of 2026 reaching 203,024 units – a 126% jump from the previous year, showing strong worldwide demand. Expanding into markets like Europe and Latin America is vital as Chinese carmakers seek growth abroad amid fierce competition and price wars at home.
BYD is a major leader in volume, selling 4.6 million NEVs in 2025 and holding about 18% of the global market share. However, BYD is facing pressure on its profit margins. Its net profit for 2025 fell 19% to $4.77 billion, and its net profit margin dropped from 5.2% to 4.1%. Its gross margin was 17.74% in 2025, down from the year before. This is different from Geely, which reported a 36% rise in core net profit for 2025 and maintained a steady gross margin. Geely's strategy to target higher-end markets and build brand value with names like Zeekr and Lynk & Co is crucial for its profitability and long-term valuation. Analysts believe this approach is placing Geely better in premium market segments.
Potential Risks for Geely
Despite Geely's strong performance, risks remain. Its past focus on gasoline engines and previous corporate governance issues, though resolved, could still cause problems. While Geely's 2025 net profit grew, its overall profitability compared to its market value is still watched closely against rivals. Geely's market value is about $33 billion, much smaller than BYD's $108 billion. BYD, even with its profit dip in 2025, still holds a bigger global market share and leads in battery electric vehicles (BEVs), selling 2.26 million BEVs in 2025. Intense competition, overcapacity, and price wars in China's auto market continue to pressure profit margins for everyone. Moreover, the global EV market faces regulatory reviews and geopolitical tensions that could affect expansion plans for Chinese makers like Geely and BYD. Geopolitical events, like oil market swings from Middle East tensions, can affect car buying habits, potentially favoring hybrids temporarily even as the shift to EVs continues.
Future Outlook and Analyst Views
Geely aims for ambitious sales of 3.45 million units in 2026, a 14% increase from its 2025 sales of 3.02 million units. The company also plans to integrate intelligent driving systems across its vehicle range this year, aiming for technological parity with leaders like Tesla. Analyst price targets for Geely Automobile Holdings Ltd. generally hover around HK$26.52, indicating a potential upside of 9-14% from current prices. The overall analyst rating remains a 'Strong Buy,' showing continued optimism about Geely's strategy, export growth, and rising profits from its electric vehicles. BYD, on its part, faces ongoing competition and a recent profit dip. However, its large scale and ongoing investment in battery technology provide a solid base. The global EV race is ongoing, with both Geely and BYD set to be major players. Geely's flexible strategy and focus on increasing its valuation offer an attractive story for investors.