Lotus Technology Inc (LOT) 2025 Q1 法說會逐字稿

Good day and thank you for standing by. Welcome to Lotus Technology Inc first-quarter 2025 earnings conference call.

(Operator Instructions)

Today's conference is being recorded.

I'd now like to hand the conference over to Mr. Demi Zhang from the company. Please go ahead.

Thank you, operator. Good morning. Good afternoon. Good evening, everyone.

Thank you for joining Lotus Tech's first quarter 2025 earnings call. This is Demi Zhang, the Head of IR at Lotus Tech. I'm honored to introduce and welcome company management with us today, CEO, Mr. Qingfeng Feng; and the CFO, Dr. Dauxe Wang.

Before we continue, please be reminded that today's discussion will contain forward-looking statements pursuant to the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involving inherent risks and Uncertainties. As such, the company's actual results may be materially different from the views expressed today.

Further information regarding risks and uncertainties is included in relevant filings of Lotus Tech with the US Securities and Exchange Commission. The company undertakes no obligation to update any forward-looking statements except as required by law.

Please also be noted that our earnest press release and this conference call will include the disclosure of an audited GAAP financial information as well as no audited non-GAAP financial measures. You can find the reconciliation of these figures in the press release available on our Investor Relations website at ir.group/lotus.com.

With that, I'd like to turn the call over to our CFO, Dr. Wang.

Dr. Wang, please.

Good day and good evening. Distinguished shareholders, analysts, and members of the prize.

Thank you very much for joining our Q1 2025 earnings release. This is Daxue Wang, the Chief Financial Officer of the Lotus. I'm honored to take this opportunity to brief you on the companies that audited financial results.

In Q1, the company delivered nearly 1,300 vehicles to the distributors, some 42% year on year, and user vehicle deliveries exceeded 2,000 units, up more than 10% year on year. These numbers reflect the scheduled transition period if upgraded the model started delivering Q2, to the effect of the priority stalking activities in the Q4 last year.

As you may know, we started revamping our electro hyper SUV and the email hyper GT map with upgraded configurations, the taking of customer delivery on the upgraded models in China during the second quarter and expect to begin deliveries in Europe in the upcoming third quarter.

Although quarterly revenues narrowed to $93 million in the first quarter, the company achieved a notable gross margin recovery, improving from the negative Q4 last year to the current 12%, placing us firmly in positive territory as the impact from prior destalking effects yeast.

No, I'll break down our sales by category and by regions. By category, lifestyle vehicles accounted for 56% of the total QR deliveries consistent with the full year 2024 figures. By region, Europe, China, and North America each contributed approximately third of the company's total deliveries, while the rest of the world region accounted for the remaining 4%.

Regarding our sales channels, the total number and composition of the sales starts by region remained stable during the first quarter. For the key financial indicators, deliveries, revenue, and gross margin, property margin have just been reported.

Cost of revenue decreased by 43% year on year to $82 million. Consequently, gross profit was $11 million. We reported an operating loss of $103 million for quarter one, a 56 year on year decrease. The net loss of a quarter was $183 million, representing a 29% reduction.

For your information, the adjust that loss and the non-GAAP measures for the quarter of unchanged. And behind these financial numbers, we want to highlight our achievements of reducing operating expenses for six consecutive quarters soon by continued rigorous implementation of efficient enhancement plans.

And now I will stop here and hand over to Ms. Feng. Thank you.

Hello. My name is Feng Qingfeng, CEO of Lotus. Allow me to share with you the most recent business progress and the strategies of Lotus. So we go on Qinghai or Yuanjian Xiangyu yung take set out the pai.

As a premium brand, we highlight the importance of brand establishment, particularly on sports car, and this is something that we have been doing this year on racing track. And the moment the Chengdu is in one to the car hong the goji zhong the ji so that the I don't don't go. Hoping to be the the fenggo jj to the city.

On May 30, we launched a national level GT1 make racing series, Lotusar. It features five rounds spanning China and Malaysia. We successfully completed the first race in the city of Chengdu. The racing series stands as China's premier FIA recognized the GT series, eligible for international sea license upgrade.

Among our customer group of Lotus, they may highlighted the vehicles aesthetic styling and the performance of the vehicle, and this is why this year we've been spending most of our efforts on the performance side.

As ultimate handling and riding iconic features of Lotus, we've been trying to stand out among other premium brands, and this one, this is also one of the reasons that this year we are trying to leverage Rais series to improve our brand awareness.

And on May 26, we have also released our 2024 year to report highlighting our progress in advancing sustainable practices, developing innovative green products, and demonstrating global leadership in clean mobility.

Back in 2024, we have launched a new technology called Hyper hybrid EV Technology. This has gained a lot of interest, and what I can show you is that the progress of this technology is very good, and later I will elaborate more on the details.

As for our product pipeline and the product planning, our Emira model year '26 has already started its delivery in August that the vehicle will commence its delivery in the US. In April, we've also started to deliver our Electra and the Maya model year 26. It started in China market first and then we are going to commence the delivery in the EU.

In recent years, the premium brands BEVs penetration does not tally our expectation. However, the interest on PHEV is gaining its momentum. We believe that such a technology is a hyper hybrid. Can supplement the disadvantages of BEV for customers who like ICE, they can still enjoy the drive train. For customers who may found a BEV, they can feel free to worry about the range.

Our new model is expected to debut at the end of this year, and the delivery of this vehicle is expected to happen in quarter next year. And allow me to share with you some of the highlights of this particular model. Performance will still remain our iconic feature for this model, and this vehicle is going to be the world's first mass produced PHEV that is a performance-oriented.

Particularly in the market with the low penetration rate of a BEV such as APAC and Middle East, we believe that such a hyper hybrid technology could be widely accepted in those markets. And this hyper hybrid technology features a 300 kilometers of range when it is driven by the pure battery and in high speed, for example, the combined driving range can reach over 1,000 kilometers.

In addition to that, it also features a dual hypercharging technology, ultra faster parking charging, and ultra-fast on the drive charging. On the drive charging rate is 5 times the power consumption of the typical driving scenarios.

It can deliver a battery charge from 10% to 80% within 12 minutes, pretty much on par with the battery swap speed. As we are very highlights on the performance side of this vehicle, it can deliver the ultimate performance under any circumstances, even though the battery may consume to lower than 5%, the performance can still be secured, and this is why that I previously highlighted the features that are on the drive charging rates are 5 times the power consumption of the typical driving scenarios.

Again, this, world's first performance oriented hyper SUV is going to debut at the end of this year and the delivery will start next quarter. Our initial target is to deliver a balanced delivery distribution across our markets.

30% in the US, 30% in the EU, 30% in China, and 1% in the rest of the world. Between 2023 and 2025, the main challenges around the US tariff hike which let us not be able to export many vehicles to the US market. Give that the current regional share of deliveries since 2024 are as follows 22% in North America, 38% in Europe, 14% for the rest of the world, and 26% for China.

And this year, we are expecting China's contribution is going to be a bit higher compared with the previous year. In the future, we are trying to leverage our US strategy to catch up the losses due to the tariff hike. At this moment we are discussing with our strategic partners in the US on localization plans in order to avoid the influence of the US tariffs.

With our strategic partners, we had an in-depth discussion around US landscape, and we believe that localization is a feasible plan. We will continue to explore US markets with our PHEV and also BEP products.

Well thank you very much, Mr. Feng and Dr. Wang. Well, due to the time constraints, we will not be holding a Q&A session today. However, we have received a number of questions regarding the progress of our hyper hybrid initiatives and our global market strategies.

So to address this key, topics, I'd like to invite Mr. Feng to share more of his insights. Mr. Feng, please.

For our PHEV products, I'd like to start with an observation regarding the PHEV market. It's actually growing very fast in both China and the US and for Lotus PHEV, it is actually quite different from the traditional PHEV structure which is engine driven.

We combined the advantages of ICE engine and also electric motor. It can deliver ultimate performance when it is needed for our customers. For example, on high speed driving, if it is driven by the motor, it may not be that energy saving.

And for our technology, when you drive on the high speed, this vehicle can be driven by engine. And in total, the technology can deliver both performance and energy saving features, and it can satisfy the scenarios of a lifestyle as well as a racetrack.

For the hyper hybrid technology at this moment, it has been widely proven and accepted in China markets, and we have also done forest study for the US and the EU markets. At this moment there hasn't been such a product existing in those markets. But if our customers is well aware of these products, we believe that they will be interested in this particular model because it can satisfy both the demands from performance vehicle as well as lifestyle vehicle.

In the future, our technology is going to be pivot around this hyper hybrid technology, and at this moment, we are also investigating the feasibility of a sports car hyper hybrid solution. For a sports car, we understand that there's a wide market for the ICE sports car, and we will definitely satisfy those.

With fans and also petro head for the sports car at the same time, we also understand that pure electric sports car is not going to attract those attention. So we are trying to investigate the visibility of a hyper hybrid sports car to see if it is going to work in the future, we will prioritize the hyper hybrid technology for both lifestyle vehicle and a sports car.

If you look at the history of Lotus, I think many of you may be aware that Lotus have been relying on external parties or suppliers on its engines such as Toyota and AMG. However, when it comes to PHEV, when Lotus possesses such a technology, we believe we can supplement to the drawback of the ICE, the lack of ICE engines.

Well thank you very much, Mr. Feng for your sharing of the insights. And again, thank you all for joining us today. We'll conclude the call soon. If you have any questions, please feel free to contact our IR team. This concludes the call. Have a good day, everybody. Thank you.