Geely's EV Exports Hit Choppy Waters: Red Sea Attacks Reportedly Threatens To Drive Up Costs And Delivery Delays

Author: Shivani Kumaresan | December 22, 2023 09:09am

Geely Automobile Holding Ltd (OTC:GELYY) (OTC:GELYF), a Chinese automaker, has reportedly indicated that its electric vehicle (EV) sales could be affected due to ongoing hostilities in the Red Sea, where Yemeni militants are targeting vessels, compelling shippers to opt for longer, costlier routes.

The company said that the majority of its shipping partners that export cars to Europe plan to reroute around the Cape of Good Hope instead of using the Suez Canal, traditionally the quickest passage from Asia to Europe.

If these Red Sea tensions persist, shipping firms are likely to revise freight rates, leading to increased transportation costs, reported Reuters.

The report cited a logistics industry source who shared that this rerouting could quintuple shipping costs and predicted a vessel shortage by the second half of January due to extended travel times.

China has exported 1.63 million vehicles to Europe in the first ten months of this year, marking a 147% increase from the previous year, as per the report quoting the China Passenger Car Association (CPCA). 

Also Read: Chinese Automaker Geely's EV Brand Zeekr Launches Rapid-Charge Batteries: Report

The surge in Chinese car sales in Europe has reportedly raised concerns among European regulators, prompting investigations into possible tariffs to protect EU automakers.

In response to the potential shipping disruptions in the Red Sea, Stellantis N.V. (NYSE:STLA), the parent company of Chrysler, stated that it is closely monitoring the situation and will adapt its strategy accordingly to manage these new shipping challenges, as per the report.

Price Action: GELYY shares closed higher by 1.61% at $20.22 on Thursday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Posted In: GELYF GELYY STLA