The move follows similar stock market listings of Geely-owned foreign marques, including Volvo Cars, which floated in Stockholm last year.
British carmaker Lotus, majority-owned by China’s Zhejiang Geely Holding Group, plans to float an initial public offering (IPO) within two years to fund its global expansion and electric vehicle (EV) development.
The move follows similar stock market listings of Geely-owned foreign marques, including Volvo Cars, which floated in Stockholm last year. Meanwhile, Polestar, a joint venture between Volvo and Geely, chose to list on Nasdaq via a special purpose acquisition company, or SPAC. Whether Lotus decides to list in London, Hong Kong or New York remains unknown.
“Geely has a lot of oars in the water with all the different brands in their portfolio,” says Tu Le, managing director at Sino Auto Insights, an auto technology consultancy. “Car manufacturing is very expensive, and anytime you can mitigate or spread that risk onto non-active investors, it should be considered. With Lotus, it’s a global brand in the automotive space with a rich tradition of history, if not poor management, so Geely sees an opportunity to get some international investors involved to raise their profile while legitimizing the Lotus brand rebirth.”
Considering the capital-intensive nature of the industry and the many EV brands that lack brand recognition, Greely needs to trust its well-thought-out messaging while deploying its capital efficiently, according to Le. “Most EV companies you won’t hear of because they’re not able to either raise the necessary capital to get to production and/or aren’t able to plan and execute without managing their burn well enough to get to that stage.”
He adds that Lotus is an exception, as a known commodity and established brand. “Its challenge is convincing consumers that they can be an ‘electric’ brand and that their brand represents SUVs at least as well as the sports cars they’re known for. Geely also has the reputation of working with foreign brands and getting them to profitability [as with Volvo]. So, an investment in Lotus would likely be less risky than unknown EV brands and management teams.