(Yicai) Dec. 3 -- Zeekr Intelligent Technology Holding said the premium electric vehicle brand of China’s Geely Holding Group expects to cut research and development costs by as much as 20 percent after integrating sister brand Lynk & Co.

Competition is set to intensify over the next five years, and the integration will generate synergies spanning the two marques’ entire business operations and supply chains, Ningbo-based Zeekr announced yesterday. The economies of scale from the move will reduce unit costs and boost market competitiveness, it said.

The integration is expected to lower R&D expenses by 10 percent to 20 percent, the bill of materials costs by 5 percent to 8 percent, and organizational costs by 10 percent to 20 percent, while lifting the capacity utilization rate by 3 percent to 5 percent, Zeekr said.

Geely revealed on Nov. 14 that Zeekr would acquire 51 percent of Lynk & Co from Volvo Cars, with the aim of resolving internal competition and selling over one million vehicles a year by 2026. The two will remain operationally independent of each other, with Zeekr focused on the luxury market and Lynk & Co on the mid-to-high-end segment. Geely retains the other 49 percent stake.

Geely Automobile Holdings established Lynk & Co with Volvo in 2016 to enter China’s premium passenger car market. Since then, the brand has sold 1.3 million vehicles. But with this year’s launch of its fully electric sedan, the Z10, Lynk & Co faced direct competition with Zeekr.

Integration of the two was imperative, Lin Jie, senior vice president of Geely Auto and general manager of Lynk & Co Automobile Sales, told Yicai in mid-November. The union will quickly result in a new EV group with annual sales of 500,000 units and enhanced competitiveness, Lin added.

After the combination, Zeekr will lay out a plan to integrate the two brands’ product lineups to ensure that they do not compete with each other, Lin pointed out. Lynk & Co will prioritize hybrid models, while in the pure EV market it will focus on compact and mid-sized cars as well as customized offerings.

Editor: Futura Costaglione