According to a research report published by Bank of America Securities, the view on the Geely Automobile (00175.HK) product cycle is positive, but its channel survey shows that the impact of the chip shortage on the second and third quarters may have been greater than originally anticipated. Furthermore, the bank estimates that Geely's sales and marketing expenses will be high, mainly because the company is aggressively developing the new high-end NEV brand Zeekr.

Sales in April fell 5% year-on-year to 100,000 units, mainly due to the chip shortage and last year's high base. The bank believes that production from May to July will be affected. It is estimated that the situation will not improve before the fourth quarter. In addition to the need for electric vehicles to use more chips, it is expected that chip management by car companies will be more challenging in the next one to two years as the penetration rate of electric vehicles increases. Also, due to rising raw material costs, the increase in sales of electric vehicles will drag down the gross profit margin of traditional manufacturers.

The bank downgraded the company's rating from buying to outperforming the market, and the target price dropped drastically from HK$30 to HK$17.