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For a car brand, becoming a "contract manufacturer" may be a derogatory term, and its value will be affected without independent positioning. For example, Hyundai brand was worried about Apple contract manufacturing, and it is rumored that the two sides could not reach an agreement in the end. However, this does not seem to be the case for domestic independent brand Geely.

Geely is hoping to become a contract manufacturer of electric vehicles, according to Reuters, citing current management of Geely, who spoke on condition of anonymity. Li Shufu, Geely's chairman, is accepting and actively seeking more contract manufacturing business, the executive said.

In just over a month into 2021 this year, Geely has announced four deals, including a joint venture with Foxconn for contract manufacturing of electric vehicles, and strategic cooperation with Jia Yueting's Faraday Future (Faraday Future) in product technology and production.

In addition, there is the production of smart electric vehicles for Baidu, and the first model will be launched next year. And Geely is working with Tencent Holdings to develop smart car control and self-driving technology.

From these four cooperation plans, we can see the intention of Geely Group. The four cooperation companies mentioned above are all companies in the field of science and technology. Such as Baidu as an Internet company, Foxconn as a technology manufacturer and Faraday as a technology intelligent car company in the future, all reflect Geely's attempt to rapidly transform the electric car brand.

It is reported that since last year, many electric manufacturers, such as Tesla and Xilai, have not sold much in the market, but their market capitalization has quickly surpassed that of many traditional car companies, which also makes Geely feel distressed. In this regard, Geely may hope to achieve a rapid transformation to an electric car company by working with technology companies.

Although Geely has already introduced several electric cars to the market, it launched a new electric vehicle platform last September at a development cost of 18 billion yuan ($2.8 billion). However, in the past two years, while the domestic new car market has been shrinking, the development of electric cars has increasingly become a trend, and Geely has still suffered a two-year decline in sales. Li Shufu thinks that Geely's strategy is too traditional. So he began to boldly adopt the policy of establishing partnerships with large technology companies.

Even if Geely's announcement of a future partnership with Faraday is not favored by the outside world, some Geely executives believe that Faraday has developed slowly since its inception and has a bad record. The cooperation between the two companies was also not well received, and Geely's share price also plummeted. However, sources said that Li Shufu ignored this cautious mentality.

The situation has also met with internal opposition, with people familiar with the matter saying that a large-scale contract manufacturer could also deprive Geely of its edge as an independent carmaker. Earlier, there were media reports that Hyundai did not want to become a contract manufacturer of Apple Car precisely because for Hyundai, contract manufacturing was like an empty shell, undermining the value of its own brand.

However, the exact number of Geely contract manufacturers has not yet been determined, and the proportion of Geely's total output is also unknown. But it is also good for the long-standing underemployment of Geely factories. Data show that Geely has an annual output of 2 million vehicles, but sold only 1.3 million vehicles in 2020, with a monthly capacity vacancy of 700000.

Geely is so radical because as new energy vehicles gradually become a trend, compared with Geely cars with a market capitalization of about $37 billion, compared with Tetra, which has a market capitalization of more than $800 billion, and Xilai, which sold only 44000 vehicles in 2020, it reflects that the transformation to electric car companies can better increase the market capitalization, thus increasing the value of car companies, which has become one of the reasons for Li Shufu's latest transformation.

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