Q1 2025 Lotus Technology Inc Earnings Call
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Operator: Good day, and thank you for standing by.
Speaker Change: Good day and thank you for standing by welcome to the Technology, Inc. First quarter 2025 earnings Conference call.
Operator: Welcome to Lotus Technology Inc. first quarter 2025 earnings conference call. At this time, all participants are in a listen only mode. Please be advised that today's conference is being recorded.
Speaker Change: At this time all participants.
Speaker Change: Suddenly, but could be applied that to the conference is being recorded.
Demi Zhang: I'd now like to hand the conference over to Mr. Ming Zhang from the company. Please go ahead. Thank you, operator. Good morning, good afternoon, and good evening, everyone. Thank you for joining Lotus Tech's first quarter 2025 earnings call.
Speaker Change: I would like to hand, the call trends are back to that'd be chunk of the company. Please go ahead.
Danny Chung: Thank you operator, good morning, good afternoon, and good evening, everyone. Thank you for joining Lotus tax first quarter 'twenty 25 earnings call. This is Danny Chung I'm, the head of IR and low Tech stack I'm honored to introduce and welcome company management with US today CEO, Mr. Chin from flooding and if Jack Oh Doctor.
Demi Zhang: This is Demi Zhang, the head of IR at Lotus Tech.
Demi Zhang: I'm honored to introduce and welcome company management with us today, CEO, Mr. Qingfeng Feng, and CFO, Dr. Daxue Wang. Before we continue, please be reminded that today's discussion will contain forward-looking statements pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve 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 U.S. Securities and Exchange Commission. The company undertakes no obligation to update any forward-looking statements, except as required by law.
Speaker Change: Gotcha, well before we continue please be reminded that today's discussion will contain forward looking statements pursuant to the safe Harbor provisions of the.
Speaker Change: U S Private Securities Litigation Reform Act of Nike 95 forward looking statements involve inherent risks and uncertainties and that actually 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 I'll blow to attack.
With the U S Securities and Exchange Commission the company undertakes no obligation to update any forward looking statements, except as required by law.
Demi Zhang: Please also be noted that our earnest press release and this conference call will include a disclosure of unaudited GAAP financial information as well as non-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.
Please also be noted that our earnings press release and this conference call will include that disclosure and now they get a GAAP financial information as well as non audited non-GAAP financial measures you can find a reconciliation of these figures in the press release available on our Investor Relations website at IR got good.
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Daxue Wang: With that, I'd like to turn the call over to our CFO, Dr. Wang. Dr. Wang, please. Today is a good evening.
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Daxue Wang: Distinguished shareholders, analysts, and members of the press, thank you very much for joining our Q1 2025 earnings release. This is Daxue Wang, the Chief Financial Officer of Lotus. I'm honored to take this opportunity to brief you on the company's audited financial results. In Q1, the company delivered nearly 1,300 vehicles to the distributors, down 42% year-on-year. Unusual vehicle deliveries exceeded 2,000 units, up by more than 10% year-on-year. These numbers reflect the schedule transition period before Hyper-Gradient models started delivering Q2. In addition to the effect of the priority stocking activities in the Q4 last year. As you may know, we started revamping our Electra Hyper-ICV and the EMEA Hyper-GT line map with upgraded configurations.
Speaker Change: English shareholders.
Wang: My grandfather price. Thank you very much for joining our Q1 'twenty earnings release space is partially a Wang Chief Financial Officer. After allowed US also to take this opportunity to brief you on the company's audited financial results.
In Q1, the comparability of our EMEA, certainly hungry vehicles to the distributors.
I'm, 42% year on year and you also vehicle deliveries exceeded 2000 units.
Speaker Change: And 10% year on year.
Speaker Change: These numbers reflect the scheduled foundation period.
Speaker Change: Intermodal started delivery in Q2.
Speaker Change: In fact, our priority stocking activities in Q4 last year.
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Speaker Change: You May you Hydra GTI lineup with upgraded configurations.
Daxue Wang: We kicked off customer delivery on these 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 priority stocking effects ease.
At our customer delivery I'll be upgraded models in China during the second quarter and expect to.
Speaker Change: Begin deliveries in Europe in upcoming third quarter.
Speaker Change: Although quarterly revenue was narrowed to <unk> III meeting U S dollars in the first quarter. The company achieved a lot about gross margin recovery improve.
Speaker Change: Improving from the lack there pufahl up here the kind of 12%.
Speaker Change: We are firmly in positive territory as the impact from prior Destocking effects east.
Daxue Wang: Now, I'll break down our sales by category and by region. By category, lifestyle vehicles accounted for 56% of the total Q1 deliveries, consistent with the full year 2024 figures. By region, Europe, China and North America each contributed approximately one 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 stars by region remained stable during the first quarter.
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Speaker Change: Breaks down our sales by category and by regions.
Speaker Change: Our category lifestyle vehicles accounted for separately.
Speaker Change: 6% of our total Q1 deliveries.
Speaker Change: And the way the full year 2024 figures.
Speaker Change: By region, Europe, China, and Latin America, each contributed approximately a third of our company's total deliveries.
Speaker Change: The rest of our Florida region accounting for the remaining 4%.
Speaker Change: Regarding our sales channels I told the Niobrara and the competition now the sales starts by region remained stable during the first quarter.
Daxue Wang: For the key financial indicators, deliveries, revenue and gross profit margin have just been reported. Cost of revenue decreased by 43% year-on-year to 82 million US dollars. Consequently, gross profit was 11 million US dollars. We reported an operating loss of $103 million for Q1, a 56-year-on-year decrease. The net loss of Q1 was $183 million, representing a 29% reduction. For your information, the adjusted net loss under the non-gas measures for the quarter was unchanged.
Speaker Change: Well the key financial indicators deliveries revenue and gross margin property margins have just been reported cost of revenue decreased by four 3% year on year to $82 million.
Speaker Change: Consequently, gross profit loss.
Leading U S dollars.
Speaker Change: We reported operating loss of 103 media startup for quarter one.
The FX year on year decrease that.
Speaker Change: Last quarter.
183 million us dollars, representing 29% reduction.
For your information adjusted net loss and non-GAAP measures for the quarter was unchanged.
Daxue Wang: Behind these financial numbers, we are to highlight our achievement of reducing operating expenses for six consecutive quarters to continue the rigorous implementation of efficient enhancement plans.
Speaker Change: Behind these financial numbers.
Speaker Change: To highlight our achievements of reducing operating expenses for six consecutive quarters driven.
Speaker Change: Driven by continued rigorous implementation arbitration that you have to win clients.
Feng Qingfeng: And now I will stop here and hand over to Ms. Feng. Thank you. Hello everyone, I am Feng Qingfeng, CEO of Lotus Tech. Let me introduce to you the progress of our strategy and business. Hello, my name is Feng Qingfeng, CEO of Lotus.
Speaker Change: And now I will stop here and hand over to Mr. Paul Thank you.
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Feng Qingfeng: Allow me to share with you the most recent business progress and the strategies of Lotus. As a high-end brand, we still focus on brand construction. So this year, especially for those who are focused on sports like Lotus, we need to create a brand for the track. As a premium brand, we highlight the importance of brand establishment, particularly on sports car, and this is something that we've been doing this year on racing track. On May 30th this year, we officially launched the Lotus Tech, a state-of-the-art GT single-seater. This series of competitions will cover five branches in China and Malaysia.
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Speaker Change: As a premium brands, we highlight the quarter's brand establishment, particularly on sports car.
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Feng Qingfeng: We have already held our first branch in Chengdu. Lotus Cup has become China's first collective competition to be certified by the International Technical Center. China is the first in a single brand. Contestants can gain more points through this competition, so that they can compete internationally. On May 30th, we launched a national-level GT1 Make racing series Lotus Cup. 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 GT series, eligible for international sea license upgrades. Among the Lotus users, the two most strengthened labels are First, this car is very beautiful Second, the performance of this car is very good So performance is still our main highlight Among our customer group of Lotus, they may highlight to the vehicle's aesthetic, styling and the performance of the vehicle.
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Speaker Change: On May 30, we launched a national level GT Onemain racing series Floater, Scott It features high ground spanning China and Malaysia, We successfully completed the first race in the city of Chengdu The racing series spans as China's Premier.
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Speaker Change: Let me highlight the vehicles aesthetic styling underperformance of the vehicle and this is why that this year, we've been spending most of our assets on the performance side.
Feng Qingfeng: And this is why that this year we've been spending most of our efforts on the performance side. The label of extreme driving has penetrated into the heart of the user. This is where we are different from others. This is where we stand out. Extreme driving, this is still our label. So such events can strengthen and sharpen our brand. As Osmo is handling and riding iconic features of Lotus, we've been trying to stand out among other premium brands. And this is also one of the reasons that this year, we are trying to leverage a race series to improve our brand awareness.
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Feng Qingfeng: On May 26, we released a 24-year ESG report, focusing on the progress of the three core areas, and participating in the sustainable development of the global economy. to develop innovative green products and excellent green manufacturing. These are some of the contributions that Lotus has made to ESG. And on May 26, we have also released our 2024 years to report highlighting our progress in advancing sustainable practices, developing innovative green products, and demonstrating global leadership in clean mobility. In 2014, we released the Luyao technology of super-900V super-mixed electricity technology. We have gained everyone's attention and attention. This technology has progressed very smoothly.
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Feng Qingfeng: It has already started to be installed on vehicles. I will briefly introduce the development of this vehicle later. 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. In terms of product planning, there hasn't been much of a change. EMERA Model Year 2.6 is already starting to be delivered worldwide. At the same time, it will be delivered in the US by August.
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Speaker Change: Back in 2024, we have launched a new technology, a collagen a high power High bridge EV technology. This has gained a lot of interests.
Speaker Change: What I can assure you is that the progress of this technology is very good and later I will elaborate more on the details.
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Feng Qingfeng: As for our product pipeline and product planning, our Emira Model Year 26 has already started its delivery in August and the vehicle will commence its delivery in the U.S. In April this year, we released the Electra and EMEA Model Y26 Since the beginning of delivery, it has been delivered all over the world First of all, we delivered it in China Now the car has also started to be delivered in Europe In April, we've also started to deliver our Eletra and EMEA model year 26. It has started in China market first, and then we are going to commence the delivery in the EU.
Speaker Change: As for our product pipeline and the product planning our interim model year 'twenty six has already started to delivery in August of the vehicle wealth managed distillery in the U S.
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Speaker Change: In April we also started to deliver our Electra and EMEA our model year 2006. It has started in China market first and then we're going to commence a delivery in the EU.
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Feng Qingfeng: We believe that this technology will make up for the shortcomings in the battery industry. For those who are passionate about fuel, they can still drive a fuel engine. At the same time, for those who are passionate about charging, they can also eliminate the anxiety of the journey. In recent years, the premium brand's BEV penetration does not tally our expectation. However, the interest on PHEV is gaining its momentum. We believe that such a technology of the hyper hybrid can supplement the disadvantages of BEV. For customers who like ICE, they can still enjoy the drivetrain. For customers who may be fond of BEV, they can feel free to worry about the range.
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Speaker Change: For customers, who are like ICD, they can still enjoy the drivetrain for customers who remain under therapy.
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Feng Qingfeng: 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 one next year. And allow me to share with you some of the highlights of this particular model. For us, the main thing is the super performance. Performance is our label. This model will also become the world's first The world's first mass-produced super-mixing, with performance-oriented super-mixing. 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 performance oriented. Especially in the market that has a low penetration rate of pure electricity, this car will become a very good and acceptable product.
Speaker Change: Our new model is expected to talk to you at the end of this year and the delivery of this vehicle is expected to happen and of course the wireless.
Speaker Change: Allow me to share with you some of the highlights of this particular model for multiple molybdenum.
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Speaker Change: Performance will still remain our iconic feature of this model and this vehicle is again to be the first the last produced.
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Feng Qingfeng: For example, in the Middle East and Asia, the penetration rate of pure electricity is always relatively low. But after we use this super hybrid, these markets should be able to develop very quickly. Particularly in the market with a 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.
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Speaker Change: Particularly in the market with low penetration rates of AEP such as APAC.
Speaker Change: We believe there is such a high fat hybrid technology could be widely accepted in the market.
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Feng Qingfeng: 他的亮点将会成为在纯电完全纯电续航下不在不起用发动机的情况下纯电续航能够超过300公里综合续航也就是在这个发动机利用发动机的综合性能高速的时候可以完全用发动机驱动平时的时候他也可以给电池充电综合续航能够达到1000公里以上 And this hyper hybrid technology features a 300 kilometers of range when it is driven by the pure electric battery. And in high speed, for example, the combined driving range can reach over 1000 kilometers. So we also promote this super fast charging, we call it double flash charging technology. 即使在充电的时候很快,在行驶当中的时候,发动机启动向电池充电的也变得很快,我们叫五倍放电速度。 In addition to that, it also features a dual hypercharging technology, ultra fast parking charging and ultra fast on the drive charging. On the drive charging rate is five times the power consumption of typical driving scenarios. 如果说10%到80%的这个电量的充电的情况下 12分钟即可充满 12分钟即可从10%充到80% 几乎可以和换电相比 It can deliver a battery charge from 10% to 80% within 12 minutes, pretty much on par with the battery swap speed.
Speaker Change: And this hyper hiway technology features a 300 kilometers of range. When it is driven by the pure electric battery and in high speed. For example, the combined the driving range and reached over 1000 kilometers.
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Speaker Change: In addition to that it also features a dual hyper charging technology ultra fast parking charging and ultra fast on the Jive charging on the drive charging rates is at five times the power consumption typically driving scenarios.
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Speaker Change: It can deliver a battery charged from 10% to 80% within 12 minutes.
Speaker Change: So much on par with the battery swap speeds.
Feng Qingfeng: As a new car, under any circumstances, we have to highlight its performance. Even in the event of a power failure, we have to ensure that the vehicle, for example, in the event of a power failure of less than 5%, we still have to ensure the performance of the vehicle, rather than entering the mode of avoidance. So our charging rate in the form is up to 5 times, the discharge rate is 5 times. 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 seem to lower than 5%, the performance can still be secured.
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Feng Qingfeng: And this is why that I previously highlighted the features that on the drive charging rate is five times the power consumption of a typical driving scenario. This is the world's first super-mix based on performance It will be launched this year and will be delivered in the first quarter of next year 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 one.
Speaker Change: Secured and this is why that I previously highlighted the features that are on the drive charging ranges of five times. The power consumption is a typical jargon scenarios.
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Feng Qingfeng: As a global strategy, distribution of global sales is also very important. In general, this is to achieve the sales structure we originally wanted. When we first proposed it, we needed 3331. European Union, China, and other regions. We hope to achieve such a ratio, a 3-3-3-1 ratio. Of course, from From 2023 to 2025 and until today, the main change is the United States. Because after the increase in tariffs, our electric vehicles did not enter the market again. Only a small number of electric vehicles entered the market. So the United States' electric vehicles did not enter the market, but they also achieved a good result.
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Feng Qingfeng: So the globalization ratio is 22% in North America, 38% in Europe, 26% in China, and 14% in other countries. Of course, starting in 2025, China's globalization ratio will also increase. Our initial target is to deliver a balanced delivery distribution across our markets. 30% in the US, 30% in EU, 30% in China, 1% in the rest of the world. Between 2023 and 2025, the main challenges around the US tariff hike, which led us to not be able to export many vehicles to the US market. Given that, the current regional share of deliveries since 2024 are as follows.
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Speaker Change: Our initial target is to deliver a balanced delivery distribution across our markets.
Speaker Change: And in the U S 30% in EU.
Speaker Change: And in China, 1% and rest of about between 2023 ended 2020 time the main challenges surrounds over U S tariff hike, which.
Speaker Change: Let us not be able to export.
Speaker Change: Many of vehicles to the U S markets given that the current regional share of deliveries. Since 2024 are as follows 22% in North America, 38% in Europe, 14% for the rest of road and to 26% for China. This year, we are expecting the China distribution is going to be.
Feng Qingfeng: 22% in North America, 38% in Europe, 14% for the rest of the world and 26% for China. And this year we are expecting the China's contribution is going to be a bit higher compared with the previous year. Of course, in the future, we will use the US strategy to make up for the losses caused by tariffs in the US. We are currently... and our strategic partners to discuss the localization in the United States. Through the localization of the United States, we can avoid the tariff trade barriers and thus increase the ratio of the United States.
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Feng Qingfeng: In the future, we are trying to leverage our U.S. strategy to catch up the losses due to the tariff hike. At this moment, we are discussing with our strategic partners in the U.S. on localization plans in order to avoid the influence of the U.S. tariff. Now, we are discussing with our strategic partners in the U.S. on localization plans in order to avoid the influence of the U.S. tariff. We believe that localization in the U.S. will be a good solution. So, we will open up the U.S. market in the future. We will localize our EVs and PHEVs in the U.S.
Speaker Change: In the future we are trying to elaborate shower U S strategy to catch up the losses due to the tariff hike at this moment, we are discussing with our strategic partners in the U S. On localization plans in order to avoid the influence of U S tariffs.
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Feng Qingfeng: 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 U.S. markets with our PHEV and also BEV products.
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Speaker Change: Our strategic partners, we had an in depth discussion around U S land.
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Demi Zhang: Okay, thank you.
Speaker Change: Okay. Thank you.
Demi Zhang: 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.
Mr Sun: Well, thank you very much Mr Sun and.
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Speaker Change: To the time constraints, we will not be holding in the Q&A session. Today. However, we have received a number of questions regarding the progress of our hyper hydrate initiatives and our global marketing strategy.
Feng Qingfeng: So to address these key topics, I'd like to invite Mr. Feng to share more of his insights. Mr. Feng, please. blah blah I would like to talk about the market of PHEV. The market of PHEV is growing rapidly. In fact, whether it is China or the United States, the speed of growth of these two markets is very fast. In fact, the PHEV we make is different from the traditional PHEV. The traditional PHEV is based on generators. We are a PHEV based on oil and electricity. This will not only meet everyone's needs, but also meet the needs of everyday life.
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Feng Qingfeng: 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.
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Speaker Change: And deliver ultimate performance expenditures needed to acquire customers for example on high speeds driving.
Speaker Change: It is driven by the motor it may not be about energy savings and for our technology.
Speaker Change: When you drive on the high speeds this vehicle can be driven by engine.
Feng Qingfeng: 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 race.
Feng Qingfeng: In total the technology can deliver both performance and energy saving features and you can satisfy the scenarios as a lifestyle as well as a racetrack.
Feng Qingfeng: This product, PHEV, is a product of super-mixed electricity In fact, it has already been very well verified in China Everyone can accept it very well At the same time, we have also done a sufficient research on Europe and the United States For the US market and the European market There is no such product at present But if we explain this product to the consumer, the consumer is still very, very interested in such a product. We think this is a product that can really satisfy performance and daily home use. 优优独播剧场——YoYo Television Series Exclusive For the hyper-hybrid technology, at this moment, it has been widely proven and accepted in the China market.
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Feng Qingfeng: Sure.
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Feng Qingfeng: And we have also done a thorough study for the US and EU markets. At this moment, there hasn't been such a product existing in those markets. But if our customers are well aware of this product, 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.
Speaker Change: Existing in those markets.
Speaker Change: Our customers is well aware that this product we believe that there will be interested in this particular model that you can satisfy the demand from performance vehicle as well as lifestyle vehicle.
Feng Qingfeng: In the future, our product technology will be more focused on the development of super-conducting PHEV, and we are also studying whether such a product will be suitable for racing. In the future, our technology is going to be pivoted around this hyper-hybrid technology. And at this moment, we are also investigating the feasibility of a sports car hyper-hybrid solution. We are also exploring the possibility that pure-electric sports cars are difficult to win the consumers' trust. But if we use this hyper-hybrid technology to make sports cars, we may be able to win the consumers' trust. In the future, we will focus on this hyper-hybrid technology, whether it is for daily use or sports cars.
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Feng Qingfeng: For a sports car, we understand that there is a wide market for the ICE sports car, and we will definitely set aside those Lotus fans and also petrolheads for the sports car. At the same time, we also understand that a pure electric sports car is not going to attract those attentions. 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 vehicles and the sports car.
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Feng Qingfeng: As we all know, in the era of sports cars, Lotus was limited by its shortcomings in high-performance engines. We don't have high-performance engines. We use high-performance engines from other brands, such as Fengtian and AMG, to develop our sports cars. If we enter the era of mixed electric vehicles, we will have the technology to face the future and make up for our shortcomings in engines.
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Feng Qingfeng: xiang de hua zhao dao yi ge heng hao de 动力总成的解决方案 Back in, 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 the drawback of the ICE, of the lack of ICE.
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Feng Qingfeng: Tony its ontology is javan.
Feng Qingfeng: Okay.
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Feng Qingfeng: The IC.
Demi Zhang: Thank you.
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Demi Zhang: Thank you very much, Mr. Sun, for your sharing of the insights. And again, thank you all for joining us today.
Mr. Fahrenheit: Well, thank you very much Mr. Fahrenheit for sharing of insights and <unk>.
Demi Zhang: Again, thank you all for joining US today, we will conclude the question. If you have any questions. Please feel free to contact our IR team. This concludes our call have a good day everybody. Thank you.
Demi Zhang: We'll conclude the call soon.
Demi Zhang: If you have any questions, please feel free to contact our IR team.
Demi Zhang: This concludes the call. Have a good day, everybody. Thank you.
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