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Chinese EVs Navigate Global Markets Amid Rising Trade Tensions
May 12, 2024
China’s electric vehicle (EV) sector is making strategic moves into offshore markets for increased funding, exemplified by the recent success of Zeekr, a premium EV brand under Geely, which saw its shares surge 34% in the largest U.S. IPO by a Chinese company since 2021.
The Hangzhou-based Zeekr raised $441 million in New York, selling 21 million American depositary shares priced at $18 to $21 each. This debut coincides with impending trade barriers from the U.S. and Europe on Chinese-made cleantech, with the Biden administration expected to hike tariffs on Chinese EV imports and the European Commission investigating electric car imports from China.
Despite these challenges, investor appetite for Chinese cleantech remains strong, evidenced by upcoming IPOs of companies like Horizon Robotics and Black Sesame Technologies in Hong Kong. Additionally, CATL, the world’s largest EV battery maker, is progressing with a share sale in Hong Kong.
However, uncertainties loom for Chinese automakers in Europe and the U.S. due to geopolitical tensions and concerns over technology transfer. In contrast, China’s domestic EV market continues to flourish, with sales up over 30% in the first four months of the year, signaling a shift away from internal combustion engines.
The Zeekr IPO marks a departure from strained U.S.-China relations and stringent listing rules that previously hindered Chinese IPOs. Improved market conditions and investor sentiment have driven gains in indices like Hong Kong’s Hang Seng and Nasdaq’s Golden Dragon China Index, which tracks U.S.-listed Chinese companies.
Despite Zeekr’s lower valuation compared with previous estimates, the IPO attracted significant interest, with cornerstone investors acquiring two-thirds of the shares. This imbalance between supply and demand contributed to a positive market response.
As Chinese EV companies navigate global markets amidst trade tensions, they face both opportunities and challenges. While investor demand remains robust, intensified competition in China’s auto market and slower EV penetration in Europe and the U.S. underscore the need for cautious investment strategies.
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