Geely's Two-Front Battle: Record Revenue Meets Mounting Trade Barriers

Geely's record Q1 revenue of 83.8B yuan masks a 27% profit drop, but adjusted core profit rises 31% as export sales surge 126% offset domestic headwinds.

The Chinese automaker is navigating a paradox. Geely Automobile Holdings posted its highest-ever quarterly revenue of 83.8 billion yuan in the first three months of 2026, a 15% year-on-year surge, yet reported net profit tumbled 27% to 4.17 billion yuan. Strip out currency swings and impairment charges, however, and the picture brightens considerably: adjusted core net profit climbed 31% to 4.56 billion yuan, underscoring that the underlying business is gaining traction even as the broader Chinese market contracts.

Home Market Headwinds

Domestic demand is the primary drag. China's overall auto market shrank 17% to 20% in the first quarter, with new-energy vehicle sales — encompassing both battery-electric and plug-in hybrid models — falling as much as 23%. Geely's own April domestic sales slumped nearly 28% versus the same month last year. A brutal price war in the EV segment, reduced government purchase subsidies, and a vehicle purchase tax that jumped from zero to 5% have all squeezed margins across the industry.

The company is fighting back with technology. At the Auto China 2026 show, Geely unveiled its i-HEV hybrid system, which it claims achieves a thermal efficiency of 48.41% and recorded fuel consumption of just 2.22 liters per 100 kilometers in testing — an efficiency benchmark. A new off-road concept boasting over 1,000 horsepower and a Level 4 robotaxi prototype also made their debuts. The Galaxy M7, priced from roughly 109,800 yuan, targets the mass market, and Geely plans four to five new hybrid models this year.

Export Explosion Offsets Domestic Weakness

International markets are picking up the slack. Export sales hit a record 203,000 vehicles in the first quarter, up 126% year on year, while NEV exports soared 572% to 125,000 units. In April alone, overseas shipments surged to over 83,000 vehicles — a roughly 245% jump. For the full year 2026, Geely now targets 750,000 exported vehicles, up from an earlier forecast of 640,000. Morgan Stanley projects Chinese auto exports overall will grow 88% this year.

The US Conundrum

The most intriguing — and complex — piece of the puzzle is North America. Geely's parent, Zhejiang Geely Holding Group, is exploring a US market entry through its Swedish subsidiary Volvo's underutilized assembly plant in Ridgeville, South Carolina. The facility currently builds the EX90 and Polestar 3, both of which have seen sluggish sales, and Volvo has indicated willingness to produce Geely-branded EVs there as well.

The calculus is straightforward: stacked US tariffs on Chinese-made EVs make direct imports commercially unviable, while new regulations targeting Chinese vehicle technology — software restrictions from model year 2027 and hardware limitations from 2030 — add a second barrier. Any Geely model built in South Carolina would need a bespoke software stack and largely non-Chinese components. The company aims to decide on a US entry by 2029 at the latest.

Zeekr and Lynk & Co, both premium brands under the Geely umbrella, are considered the most likely candidates for a US launch. Zeekr already has a toehold: Waymo uses a Zeekr vehicle as the platform for its autonomous fleet in San Francisco. The group also holds stakes in Polestar and Lotus, both of which have existing dealer networks in the US, potentially accelerating market access.

Stock Performance and Dividend

Geely's shares have risen roughly 24% since the start of the year, currently trading at 2.48 euros — about 9% below the April high of 2.73 euros but well above the 200-day moving average of 2.03 euros. For the 2025 financial year, the company has proposed a dividend of 0.500 Hong Kong dollars per share, payable in July 2026.

The success of Geely's US ambitions hinges on the trajectory of trade talks between Washington and Beijing — and on whether the company can craft a regulatory-compliant solution for the connectivity conflict before the 2029 deadline.