Lotus Tech (LOT) Q4 2025 Earnings Call Transcript

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Date

Friday, April 10, 2026 at 8 a.m. ET

Call participants

• Chief Executive Officer — Feng Qingfeng
• Chief Financial Officer — George Tang
• Host — Michelle Ma

Takeaways

• Strategic investment -- $23 million equity financing secured from eCarX, creating deeper capital and operational ties with a global technology partner.
• Certification milestone -- The Hyper SUV Electre received R171.01 highway navigation assistance certification, making it the only Chinese-made electric vehicle with this status and second globally, supporting EU premium market access.
• Sales outlets -- 211 outlets globally: 67 in Europe, 58 in China, 48 in North America, and 38 in other regions, indicating a diversified retail presence.
• North America expansion -- The company plans to grow its six-dealer network in Canada and will begin customer deliveries of the Electre in May, leveraging recent tariff reductions.
• New hybrids launched -- Emira, Electre, and EMEA variant launches contributed a rising share to total sales, stabilizing overall product volumes.
• Hybrid model launch -- For Me (Electre X) launched with deliveries beginning March 30, featuring a 900-volt hybrid architecture, 70 kWh battery, 952 horsepower, and more than 1,400 kilometers CLTC tested range, with significant performance metrics (0.7 liters/100 kilometers fuel use, 3.3-second 0–100 kilometers/hour acceleration).
• Inventory reduction -- Stock levels dropped by 43% in 2025 following destocking, establishing a healthier inventory base for 2026.
• Gross margin -- Reached 9% for the full year and 10% in Q4; improvements attributed to inventory clearance, reduced sales subsidies, centralized procurement efficiencies, and increased high-margin service revenue.
• Cost controls -- Structural cost measures in R&D, marketing, and administration—supported by Geely resources and streamlined organization—are positioned as sustainable drivers for 2026 financial discipline.
• Service revenue -- Grew 69% year over year in 2025, with over 75% derived from R&D services sold to first-tier OEMs.
• Chinese market resilience -- Sales in China increased 3% to 2,900 units, despite a 4.4% contraction in the luxury segment priced above RMB 400,000.
• PHEV market opportunity -- For Me launch targets growing PHEV SUV segment in China, with segment sales rising from 140,000 (2022) to almost 290,000 (2025).
• Tariff impacts -- U.S. tariffs reduced UK-made vehicle volume by 60%, Canada cut tariffs on Chinese-made EVs from 100% to 6.1%, opening growth opportunities.
• European PHEV launch -- For Me/Electre X EU launch set for Q4 2026, with certifications and deliveries beginning October through December.
• Planned geographic expansion -- Entry into Brazil and wider South America advancing, with a new dealer and initial wholesales completed.

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Risks

• The CEO stated, "the EU and US tariffs against Chinese-made EVs have also exerted pressure on our pricing in the EU, and for the US market, it is basically impossible for us to enter," highlighting direct barriers to U.S. market entry and pricing challenges in Europe.
• Feng Qingfeng noted, "we did see the delivery volume decrease year over year," with about 60% of the volume impact attributed to US tariffs on UK-made vehicles.
• "We actively started destocking in 2025," was necessary, implying prior overstock conditions; logistics adjustments delayed some market entries and sales recoveries.
• Rising prices for batteries and chips will "put pressure on our gross margin," as stated by the CFO, citing ongoing cost headwinds in key components.

Summary

Lotus Technology (NASDAQ:LOT) emphasized resilient gross margin gains to 9% for the year and executed a major inventory reduction of 43%, strengthening operational flexibility. A $23 million strategic equity investment and technology partnership with eCarX expands technological resources for future growth. Notably, the For Me hybrid model debut, rapid post-launch deliveries, and favorable tariff changes in Canada and the U.S. for select models broaden potential market access, despite the CEO's explicit warning of material U.S. and EU tariff hurdles. The company also announced concrete timelines for hybrid and PHEV launches in the EU and China, outlining expanded sales coverage across North America and South America.

• The CFO directly linked 69% year-over-year service revenue growth to R&D contracts with first-tier OEMs, supporting revenue diversification claims.
• Management identified geographies such as Italy, Spain, and Saudi Arabia as strategic targets for hybrid models, leveraging slow BEV adoption rates in those markets.
• Both performance (0–100 kilometers/hour in 3.3 seconds, over 1,400 kilometers range) and fuel efficiency (0.7 liters/100 kilometers) were detailed for For Me, distinguishing Lotus Technology offerings in the hybrid SUV segment.
• Leadership confirmed a sustainable cost discipline strategy with structural adjustments, not temporary cuts, facilitated by alliance partners, enhancing profit margin outlook for 2026.

Industry glossary

• R171.01 certification: EU highway navigation assistance standard for advanced driver-assistance systems, seen as a premium market access requirement.
• CLTC: China Light-Duty Vehicle Test Cycle, a regulatory procedure that tests vehicle efficiency and range claims under Chinese protocols.
• PHEV: Plug-in Hybrid Electric Vehicle, combines an internal combustion engine with rechargeable battery systems for hybrid operation.
• OEM: Original Equipment Manufacturer; in this context, other major automakers purchasing Lotus Technology R&D services.
• BOM: Bill of Materials; total material costs comprising the inputs to manufacturing a vehicle.

Full Conference Call Transcript

Feng Qingfeng: In equity financing, we secured a strategic equity investment of $23 million from eCarX, deepening our global strategic partnership through capital ties. Going forward, we will jointly accelerate innovation in next-generation intelligent cockpit ecosystems to deliver AI-driven experiences to consumers and collectively enhance product competitiveness. On the tech side, our Hyper SUV Electre became the first and only Chinese-made electric vehicle to earn R171.01 certification for highway navigation assistance. It is also only the second automaker in the world to achieve this, which is a huge validation of our advanced driver assistance system and opens more doors in the premium European market.

On brand development, we teamed up with House of Automotive for the exclusive In Progress exhibition as part of the 2026 Milan Design Week. We showcased our industrial design philosophy and the Theory One concept car, proving once again how Lotus Technology Inc. blends technology and aesthetics in a way that feels luxurious and forward-thinking. For our market strategy, Lotus Technology Inc. is continuing to refine our global footprint and make our sales channels more efficient. We now have a well-balanced distribution network across four major regions. As of December, we had 211 sales outlets worldwide: 67 in Europe, 58 in China, 48 in North America, and 38 in the rest of the world.

In China, we kept expanding and upgrading our dealer network. We opened a new store in the city of Dalian and refreshed several others. Dealers have been hiring more staff, adding more outlets, and ramping up online marketing, which has clearly improved both customer acquisition and satisfaction. In North America, we plan to grow our Canadian dealer network on the basis of existing channels. We now have six dealers in Canada and expect to expand sales by the end of the year, leveraging local tariff policy opportunities. The Electre is the only Chinese-made electric vehicle priced above $80 thousand that is fully certified for the North American market.

We expect strong sales growth there and will start customer deliveries in Canada in May. In Europe, we streamlined our organization to run leaner and gave each region more freedom to tailor strategies to local needs. For example, we introduced the Business Edition models and a vehicle value protection plan from Germany, and we are expanding corporate and leasing business in the UK. As I previously mentioned in the Q3 earnings conference call, Lotus Technology Inc. is staying disciplined on costs. We are closing a few underperforming stores, expanding the high-performing ones, and redirecting resources to the markets that matter most.

On our product lineup, we are driving product competitiveness by expanding both our product range and options, playing to our strengths while fixing any gaps. The extension and upgrading of the product portfolio were core highlights of our work through the year. In 2025, new variants of the Emira, Electre, and EMEA were launched and delivered in major markets, receiving positive market feedback. The sales proportion of new models continued to increase, helping stabilize product sales. In 2025, we also focused on hybrid product development, and in the first quarter of this year, we launched our all-new hybrid SUV, the Electre X, and deliveries started just one day after the launch.

This hybrid model gives mainstream luxury buyers another great option in less mature markets that are moving more slowly towards full EVs, like Italy, Spain, and Saudi Arabia. It is also bringing in a broader mix of customers. In the future, we will keep strengthening both the sports car and lifestyle vehicle lineup, and we will roll out more hybrid vehicles on our new X Hybrid architecture. This gives consumers real choice: combustion, battery electric, or hybrid—whichever fits their needs. Allow me to share with you the progress of the launch of For Me, which is the first hybrid in Lotus Technology Inc.’s 78 years. In the EU, it is badged as Electre X, like I previously mentioned.

It completely changes what the hyper SUV can do. For Me was launched in China on 03/29/2026, and deliveries began on March 30. Before the launch, we invited dealers and media outlets from the EU to test ride and test drive this vehicle, and we received widely positive feedback. For Me runs on our X Hybrid architecture: a 900-volt high-voltage block paired with a 70 kWh battery and a total output of 952 horsepower. In CLTC testing, it delivers more than 1,400 kilometers of total range. Fuel consumption is just 0.7 liters per 100 kilometers in WLTC, and even when the battery is depleted, it is only 6.1 liters per 100 kilometers.

From zero to 100 kilometers per hour, For Me/Electre X takes only 3.3 seconds. Even when the battery is down to 10%, it still hits 3.5 seconds. In other words, performance stays strong no matter the battery level. Braking is equally impressive: 100 to zero kilometers per hour in just 33.9 meters, and the car stays above international standard vision after 12 heavy stops in a row. Plus, at high speeds, the four-speed active wing, functioning as an air brake at 170 kilometers per hour, generates 120 kilograms of downforce to help shorten the stopping distance and keep the car stable, bringing safety protection and driving confidence to drivers and passengers. Aerodynamics remain a Lotus Technology Inc. signature.

For Me carries forward our porosity design language with a low, purposeful stance and functional air ducts. Every line has a purpose. Eight raised air ducts use the Venturi effect to boost the downforce, and the 26-degree windshield angle cuts drag effectively. For Me will be gradually launched to the global market in the second half of the year. Wholesale deliveries in the EU start in October. Certification for Me in the EU will wrap up by year-end, with orders opening in October, official launch in November, and deliveries in December. In the UK, we expect wholesale to begin in mid-2027. Looking ahead, we will keep accelerating product updates and market expansion.

On the one hand, we will ramp up For Me global deliveries and, at the same time, advance the R&D and launch of new models as planned. On the other hand, we will deepen our channel partnerships and technical collaborations to make the Lotus Technology Inc. name even stronger worldwide. Thank you again for your time and support. I will now hand it back to the host for your questions.

Operator: Thank you. We will now begin the question-and-answer session. As a reminder, to ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. And if you wish to ask a question via the webcast, please type it into the box and click submit.

Operator: There may be a short pause while we compile the Q&A roster. Once again, it is 11 for questions. We will now take our first question from the line of Laura Lee of Deutsche Bank. Please ask your question, Laura. Your line is open.

Laura Lee: Thank you for taking my question. I want to ask about the total deliveries of 2025, which actually went down year over year by almost half. What are the main drivers of this volume decline in 2025, and how should we think about the potential impact of the geopolitical situation on future sales?

Feng Qingfeng: Yes, we did see the delivery volume decrease year over year, and it has been affected by many elements. The first is the uncertainty of tariffs. It has negatively impacted our production and inventory. For example, the US tariff on UK-made vehicles affected our volumes by about 60%. In addition, the EU and US tariffs against Chinese-made EVs have also exerted pressure on our pricing in the EU, and for the US market, it is basically impossible for us to enter. These influences have also affected our inventory management and our destocking progress.

We actively started destocking in 2025 and adjusted our product lineup, but after the adjustment, logistics also took some time, leading us to some late entries into some markets. In 2025, our stock level was reduced dramatically by 43% to a very healthy level, and it sets a very solid ground for 2026. In addition, we have also adopted a lean but efficient organization to help boost our profit margin.

Feng Qingfeng: Despite the negative impact of geopolitics and tariffs, we do see some new opportunities. For example, the tariff between the US and UK has been settled. UK-made vehicles to the US will be charged a 10% tariff, and it is beneficial news for our Emira sales. Actually, the Emira sales in the US have recovered to a normal status. In addition, Canada has also announced a policy toward China-made EVs: the tariff will be lowered from 100% to 6.1%. It is conducive to our exploration in North America. Given we have already certified our Electre for the US, it is a good opportunity to leverage this chance to boost our sales volume.

In addition, for our PHEV, the EU currently keeps a 10% tariff on Chinese-made PHEVs, so this is also a good window of opportunity for us to launch PHEV in October to the EU market. Despite the challenges that we have seen in the US and EU markets, we see some positive feedback from the China market. Our sales volume increased from 2,800 to 2,900, an increase of 3% year over year. In 2025, the luxury market in China priced over RMB 400 thousand dropped 4.4%, but in that circumstance, we achieved a 3% increase. This demonstrates that Lotus Technology Inc.’s product is very competitive.

We can achieve stable increases in such fierce competition, and the brand of Lotus Technology Inc. has been gradually recognized in the China market. In 2026, as we roll out the PHEV in different markets, it will help us reach wider markets, for example, markets with slower EV adoption such as Italy and Spain, and it will also help us reach a wider customer group who may have range anxiety about battery-electric vehicles. In the future, we are confident that 2026 is going to be a year for Lotus Technology Inc. to recover. In addition, we are exploring new markets such as South America and Brazil. We already have a dealer there.

The shop is going to be opened in mid-year, and the first batch of vehicles has been wholesaled. In summary, despite the negative impacts from last year, we see positive opportunities ahead.

Laura Lee: Okay, great. I appreciate the color. Just to follow up on this volume perspective, after the launch of Lotus For Me, the PHEV model, which I believe should have started deliveries by the end of last month, could you provide an update on the current order intake and delivery progress? Could you elaborate more about the volume expectation and the strategic positioning of this model? Thank you.

Feng Qingfeng: After the launch of For Me on March 29, the order status is actually tallying with our expectations. For Me is the first hybrid model from Lotus Technology Inc. in the past 78 years. It redefines the hyper SUV across all scenarios, and this is one of the reasons we can reach a wider customer group. Our consumer assets have increased fivefold. On the TikTok-equivalent platform, we ranked in the 20s on vehicle consultation targets, and on other integration platforms for vehicles priced above RMB 500 thousand, we ranked tenth. In other words, these indicate that For Me and Lotus Technology Inc. gained greater visibility, exposure, and wider brand recognition.

For PHEV, particularly PHEV SUVs priced above RMB 400 thousand in China, we see an increasing trend. In 2022, the total volume of such a segment was around 140,000; in 2024, it increased to 280,000; and in 2025, it is getting closer to 290,000. In other words, for PHEV in China, now is a good time to enjoy the benefits. This is when we at Lotus Technology Inc. have to reach a wider customer group. In the past, the customers who were interested in our BEV offerings were mostly entrepreneurs or business owners.

Now company management also shows interest in our products, and for our target customer age group, previously it was a bit younger; now we have reached a more senior age level. Among all those customer groups, owners of the BMW X5 and Porsche Cayenne show the greatest interest in our product. We are going to launch For Me/Electre X in the second half of the year in the EU market. In the EU, PHEV penetration is increasing as emissions regulations become stricter. The tariff for Chinese-made PHEV in the EU is 10%, and for Chinese-made EV it is 28.8%. There is a difference of 18.8%, which is a good opportunity we can leverage.

In the EU, PHEVs are increasing, particularly from 2024 to 2025, with an increase of 7.2% in some major countries such as Spain, Italy, and Germany, and in December 2025 we saw an increase of 30% year over year. Overall, the PHEV is going to help us have a well-balanced product lineup and product portfolio, giving our targeted luxury consumers more options to choose. The BEV and PHEV from Lotus Technology Inc. will help us acquire more market share and wider market coverage. Thank you.

Operator: We will now take our next question from Brian Lontier of SACS Small Cap Research. Brian, your line is open.

Brian Lontier: Great. Thank you for taking my question. It was really encouraging to see the improvement in gross margin going up to 9% for the full year and 10% in Q4. Obviously, services appear to have driven a lot of that. How recurring do you think that is, and do you have any guidance for 2026 gross margins?

George Tang: Thank you, Brian. The company's gross margin improvement in 2025 was driven by three key factors. First, as Mr. Feng has just elaborated, we successfully cleared aged vehicle inventories in the first half of the year. Then the second half saw a higher proportion of new vehicle sales and a significant reduction in overall variable sales subsidies. Second, we continuously reduced material costs through Geely’s centralized procurement platform. Third, we increased the share of high-margin service revenue, which lifted the overall gross margin.

Looking ahead to 2026, despite significant external headwinds such as continued price increases for core components like batteries and chips, which will put pressure on our gross margin, we expect total procurement costs, production costs, and unit D&A to decline. At the same time, we will try to maintain overall product pricing at current levels, leading to further gross margin improvement. In addition, the ongoing merger with UK Auto Cars is expected to enhance production efficiency and further support our gross margin growth. Thank you.

Brian Lontier: Great. Thank you. That is helpful. Obviously, operating expenses were cut significantly in 2025, which helped narrow your operating loss. Could you talk about any key cost-control measures that you have implemented and whether you feel like they are sustainable in 2026?

George Tang: Thank you. The company’s cost control plan consists of structural long-term initiatives rather than temporary measures. On the R&D front, the company fully leverages Geely’s R&D resources, enabling us to reduce investment in general-purpose technologies and focus on cutting-edge technology development, thereby improving our R&D efficiency. On the marketing front, the company dynamically and flexibly manages marketing spend to enhance marketing efficiency, as elaborated earlier. On the management front, the company strictly controls administrative expenses, streamlines the organizational structure, and optimizes personnel management frameworks to improve operational efficiency. We believe these factors will continue to play a positive role in 2026. Thank you.

Brian Lontier: Great. That is all I had. Xiexie.

Operator: Thank you very much for the questions. I will now turn back to the room for questions from the webcast.

Operator: Thank you for all the questions via conference call. We will now be answering investor questions via webcast. Our first question is: Service revenue grew 69% year over year in 2025. What are its core breakdown and the key drivers behind it?

George Tang: I will take this question. The company's service revenue primarily consists of R&D service revenue and vehicle service income. In 2025, R&D service revenue accounted for over 75% of the total, with the customers including first-tier OEM manufacturers. This fully demonstrates the market's strong recognition of the company's R&D capabilities as well as the company's ability to commercialize our intellectual properties. Thank you.

Operator: Our second question from the webcast is: What is the implication that the rising global oil price has on the company?

Feng Qingfeng: I think it is good news overall for new energy and a good opportunity for us, particularly for PHEV, because For Me, our first PHEV model, can be solely driven by gasoline fuel or solely driven by battery. It caters to different types of needs from our consumers, and its consumption of both fuel and electricity are very low. I previously mentioned the comprehensive fuel consumption is only 0.7 liters per 100 kilometers, and even at the depleted status, the fuel consumption is only 6.1 liters per 100 kilometers. Overall, this is a good opportunity for us to capture.

Feng Qingfeng: Especially in markets such as the Middle East where the charging infrastructure has not been very mature, the BEV adoption rate is slow. In those markets, we believe the PHEV model For Me is going to play an important role. Of course, we do see some headwinds given the hikes of oil prices. For example, the cost of our supply chain might increase and the BOM cost might also increase correspondingly, and those are some negative influences we may see. Some established luxury OEMs may take this opportunity or feel pressure to accelerate their pace into the PHEV arena, such as Porsche releasing the Cayenne BEV model, and we also see the Volkswagen Group launching some range-extender models.

For Lotus Technology Inc., we will keep demonstrating our spirit to differentiate and customize, and play a leading role in this front. Thank you.

Operator: We have reached the end of the question-and-answer session. I will now hand the conference back to Michelle Ma for her closing comments.

Michelle Ma: Thank you all again for joining us today. We will conclude the call now. The Investor Relations team remains available to answer any further questions that you may have. Please feel free to contact us through the contact information on our website. Have a great day.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.

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