Q4 2025 Lotus Technology Inc Earnings Call
Speaker #1: Good day, and thank you for standing by. Welcome to Lotus Technology Inc. fourth quarter and full-year 2025 earnings conference call. At this time, all participants are in listen-only mode.
Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone.
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Speaker #1: Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Ms. Michelle Ma, Head of Investor Relations. Please go ahead.
Speaker #2: Thank you, and welcome to Lotus Tech's fourth quarter and full-year 2025 earnings call. My name is Michelle Ma, the Head of Investor Relations here at Lotus.
Speaker #2: With me today are the CEO, Mr. Qingfeng Feng, and the CFO, Dr. Daxue Wang. Our conference call materials were issued today and are available on our Investor Relations website.
Speaker #2: We are also broadcasting this call via webcast. 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.
Speaker #2: The Cybersecurity Litigation Reform Act of 1995 addresses forward-looking statements involving inherent risks and uncertainties. As such, the company's actual future results may be materially different from the views expressed today.
Speaker #2: Further information regarding risks and uncertainties is included in Lotus Tech's relevant filings with the U.S. Securities and Exchange Commission. The company undertakes no obligation to update any forward-looking statements, except as required by applicable law.
Speaker #2: Please also note that our earnings press release and this conference call will include disclosure of unaudited GAAP financial information, as well as unaudited non-GAAP financial measures.
Speaker #2: You can find a reconciliation of these figures in the press release available on our Investor Relations website at irs.group-lotus.com. With that, I'm delighted to turn the call over to our CFO, Dr. Wang. Please.
Speaker #3: Good morning, good afternoon, and good evening to our shareholders, analysts, and media friends. Thank you very much for joining us for Lotus' fourth quarter and full-year 2025 earnings discussion.
Speaker #3: I'm Daxue Wang, Chief Financial Officer of Lotus Tech. It's my privilege to once again present the company's unaudited financial results. In the fourth quarter, the company delivered 1,908 vehicles, including 1,239 lifestyle SUVs and sedans, and 670 sports cars.
Speaker #3: For the full year 2025, total deliveries reached 6,520 units. While this represents a 64% year-on-year decrease, these figures reflect a transitional year marked by the impact of tariffs, the fifth start of the upgraded model's deliveries, and intensified market competition.
Speaker #3: Total revenues for the fourth quarter were $163 million, a 40% year-on-year decrease. For the full year 2025, total revenues were $519 million.
Speaker #3: dollars, down 44% year-on-year. Sales of goods fell 48% year-on-year, to $563 million, driven by lower sales volume. While services revenue surged 69% year-on-year, to $56 million U.S.
Speaker #3: Dollars, primarily due to the R&D service revenue. The commercialization of our intellectual properties, through technical licensing and other channels, has demonstrated significant market recognition of our pioneering technologies.
Speaker #3: Gross market improved significantly to 10% in the fourth quarter, compared to negative 11% in the same period of 2024. For the full year, gross market improved to 9% from 3% in 2024.
Speaker #3: This improvement was driven by the global rollout of upgraded model deliveries, a favorable shift in our sales mix, healthier inventory dynamics, and disciplined cost control.
Speaker #3: We continued our track record of disciplined cost management. Operating loss narrowed by 65% year-on-year to $66 million in the fourth quarter. Consecutive sequential quarterly reductions in operating losses demonstrate the company's commitment to operational efficiencies.
Speaker #3: In fiscal year 2025, lifestyle vehicle deliveries accounted for 7% of the total. With sports cars making up the remaining 30%, deliveries were primarily driven by the China and European markets.
Speaker #3: Importantly, growth in Chinese deliveries outpaced the broader premier auto segment. Underscoring the competitive strength of our product portfolio, within China, by region, China accounted for 45% of full-year deliveries, Europe 34%, North America 16%, and the rest of the world 5%.
Speaker #3: In the fourth quarter of 2025, our sports car deliveries to North America achieved remarkable quarter-over-quarter growth, even with a 7% local price increase. Earlier tariff hikes hit our Q2 sales hard, but the U.S.
Speaker #3: Adjusting UK auto import tariffs down to 10% brought policy clarity. The recovery of sports car sales in the U.S. during the third and fourth quarters fully demonstrates our strong brand appeal and price acceptability in the region.
Speaker #3: Driving a dual rebound in sales volume and gross profit margin. Research and development expenses were $171 million for the full year, down from $275 million.
Speaker #3: dollars in 2024. Reflecting targeted prioritization of our technology investments, selling and marketing expenses decreased to $153 million from $322 million, and general and administrative expenses declined to $136 million U.S.
Speaker #3: dollars, from $227 million. These reductions underscore our strong commitment to enhancing operational efficiency. Together with the gross profit increase in 2025, operating loss narrowed 46% year-on-year, and net loss decreased 58% year-on-year. On a non-GAAP adjusted basis, adjusted EBITDA for the full year improved by 63% year-on-year, narrowing to a loss of $356 million.
Speaker #3: dollars from $961 million in 2024. Beyond these numbers, I would like to reiterate that we have not reduced operating expenses for multiple consecutive quarters through value-added measures.
Speaker #3: Our improved margin performance in the fourth quarter and full year of 2025 demonstrated our continued focus on cost optimization and operational efficiency. And this was also reflected in our significantly improved bottom line of results.
Speaker #3: Going forward, we expect the global launch of our PHEV model from ME to drive sales and revenue growth. Additionally, we expect that the combination of focusing on revenue growth efforts, maximizing product positioning, and enhancing margins through strict cost reductions will allow our business to progress towards profitability and enable us to deliver long-term value to shareholders.
Speaker #3: With that, I will now turn the floor over to Ms. Feng. Thank you.
Speaker #1: 大家好，我是联华CEO 冯庆峰。
Speaker #4: Hello, everyone. This is Feng Qingfeng, CEO of Lotus Group.
Speaker #1: 各位大家好，感谢大家参加联华科技2025年第四季度及全年的业绩电话会。25年是公司战略转型的关键过渡年，面临全球市场波动、关税调整等外部挑战，我们凭借坚定的战略执行力、持续的技术创新和精修化的运营管理，实现了核心经营指标的显著改善。接下来我将从四个方面给大家介绍公司业务最新进展，包括近期重要发展的亮点、市场战略、产品矩阵和我们的全新超混车型方面上市进展。
Speaker #4: Thank you for joining the Lotus Technology Q4 and full year 2025 earnings conference call. Last year, 2025 was a really important year for us—a true turning point in our strategic transformation—even with all the global market ups and downs and higher tariffs.
Speaker #4: We made solid progress on our core operating metrics by staying focused on smart execution, pushing technological innovation, and tightening up how we run the business every day.
Speaker #4: I'll walk you through the latest developments in four key areas: our recent highlights, market strategy, product lineup, and the progress on our new hybrid model for me, or Electro X.
Speaker #1: 我先给大家介绍一下近期的发展亮点。包括我们持续提升全球品牌形象的公司发展的核心要务。25年我们在业务拓展与品牌提升方面取得了多项突破的成果。
Speaker #4: With our 78-year racing heritage, building the Lotus brand has always been front and center for us. In 2025, we scored some real breakthroughs on both the business and brand front.
Speaker #1: 首先是在赛事营销方面，首席联华杯车型于25年11月在马来西亚雪邦赛道圆满落幕。44辆赛事版的联华Emira同台竞技，作为一个单一赛事，彰显联华百年赛道基因的强大感召力。同时26年赛季的开始，4月3日正式开始，我们将通过这一赛事平台，持续传递品牌的运动精神与技术实力。
Speaker #4: In Lotus Sports, we wrap up for the very first Lotus Cup one-man race at Sepang International Circuit in Malaysia, back in November last year.
Speaker #4: Forty-four race track Lotus mirrors hit the track and it was a sensational showcase of the brand's racing DNA. The 2026 season actually kicks off on April 3rd this year, and we will keep using this platform to share our motorsport spirit and cutting-edge tech with fans everywhere.
Speaker #1: 在股权融资方面，我们获得了一卡通2300万美元的战略股权投资。通过资本纽带深化双方的全球战略合作，未来我们将共同加速对下一代智能座舱生态系统的创新，为用户带来更卓越的AI驱动体验，共同提升产品的核心竞争力。
Speaker #4: In equity financing, we secured a strategic equity investment of $23 million from EcarX, deepening our global strategic partnership through capital ties going forward.
Speaker #4: We will jointly accelerate innovation in next-gen intelligent cockpit ecosystems to deliver AI-driven experiences to consumers and collectively enhance product competitiveness.
Speaker #1: 在技术发展方面，我们的超跑SUV Electro成功获得了联合国欧洲经济委员会颁发的R171认证，成为截至目前首款且唯一搭载高快路领航辅助功能，并获此认证的中国制造电动车型。公司也是全球第二家获此认证的车企，这一成就不仅验证了我们在高级辅助驾驶领域的技术硬实力，更为我们进一步开拓欧洲高端市场引来了一些机遇。
Speaker #4: On the tech side, our Hyper SUV Electro became the first and only Chinese-made electric vehicle to earn UN R171.01 certification for highway navigation assistance.
Speaker #4: Lotus is also only the second automaker in the world to achieve this, which is a huge validation of our advanced driver assistance systems and opens more doors in the premium European market.
Speaker #1: 在品牌建设方面，我们携手Haas Automotive联合打造专属展览In Progress重返2026米兰设计周。集中呈现联华领先的工业美学理念，Zero One的概念作品，通过深化与豪华及工业领域的跨界合作，我们持续提升品牌的全球影响力和豪华调性，让更多消费者感受到联华科技与美学融合的品牌魅力。
Speaker #4: On brand development, we teamed up with Haas Automotive for the exclusive In Progress exhibition at the 2026 Milan Design Week. We showcased our industrial design philosophy and the CR1 concept car, proving once again how Lotus blends technology and aesthetics in a way that feels luxurious and forward-thinking.
Speaker #1: 在市场战略方面，我们公司不断完善全球市场布局，提升渠道效率。我们构建了均衡的全球四大区域的分销网络，截至12月底全球共计211家销售门店，欧洲67家，中国58家，北美和其他地区分别为48和38家。
Speaker #4: For our market strategy, Lotus is continuing to refine our global footprint and make our channels more efficient. We now have a well-balanced distribution network across four major regions.
Speaker #4: As of the end 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.
Speaker #1: 在中国市场，我们进一步拓展网络和经销商的迭代升级，分别在大连开设了新网点，升级了南京、佛山、贵阳等地的经销商，让终端的服务能力和销售能力得到提升，同时全网经销商进行人员和网点的扩容，增加线上的营销能力，实现了获客效率与客户满意度的双重提升。
Speaker #4: In China, we kept expanding and upgrading our dealer network. We opened a new store in the city of Dalian in China, and refreshed several others.
Speaker #4: Dealers have been hiring more staff, adding more outlets, and ramping up online marketing, which has clearly improved both customer acquisition and satisfaction.
Speaker #1: 针对北美市场，我们计划在现有渠道基础上拓展加拿大的经销商网络。加拿大现有6家经销商，预计到年底将会拓展到12家。充分把握住加拿大关税的政策机遇，Electro作为北美市场唯一定价8万美元，且完成认证的中国制造电动车型，有望在加拿大实现强劲的销售增长。我们计划于5月份正式在加拿大开启交付。
Speaker #4: And in North America, we plan to grow our Canadian dealer network on the basis of existing channels. Currently, we have six dealers in Canada, and we expect to expand to 12 by the end of the year.
Speaker #4: Fully leveraging local tariff policy opportunities. The Electro is the only Chinese-made electric vehicle priced above $80,000 that's fully certified for the North American market.
Speaker #4: So we expect strong sales growth there. We will start customer deliveries in Canada in May.
Speaker #1: 在欧洲地区，我们进行了组织结构的重组与精简，提升运营效率。同时赋能各区域聚焦本地的市场需求，战略规划至营销推广方案落地。比如在德国推出商务版车型及车辆增值保障计划，在英国进一步拓展并培育企业用车和汽车租赁业务。
Speaker #4: In Europe, we streamlined our organization and run leaner, and gave each region more freedom to tailor strategies to local needs. For example, we introduced a business edition model and vehicle value protection plan from Germany, and we are expanding corporate and leasing business in the UK.
Speaker #1: 正如我在第三季度业绩说明会所说的，公司将持续审慎加强成本控制，进行门店成本的结构调整。关闭部分低效的商超店，拓展高效能门店，降低门店的运营费用，将资源聚焦在重点市场。
Speaker #4: As I previously mentioned in the Q3 earnings conference call, Lotus is staying disciplined on costs. We are closing a few underperforming stores and expanding the high-performing ones, and redirecting resources to the markets that matter most.
Speaker #1: 我们的产品矩阵也不断去完善，公司通过产品和动力形式的多元化，多轮驱动公司的竞争力。拓展优势的同时，补齐短板，持续增强产品竞争力。产品矩阵的丰富升级使我们全年工作的核心亮点。
Speaker #4: On our product lineup, we are driving product competitiveness by expanding both our product range and powertrain options, playing to our strengths while fixing any gaps.
Speaker #4: The expansion and upgrading of the product portfolio were core highlights of our work throughout the year.
Speaker #1: 自25年IMERA Electro和IMEA在各大市场推出了新款，并进行全球交付，取得了良好的市场反馈。新款销量占比持续提升，助力产品销量企稳。
Speaker #4: In 2025, new variants of IMERA Electro and IMEA were launched and delivered in major markets, receiving positive market feedback. The sales proportion of new models continues to increase, helping stabilize product sales.
Speaker #1: 25年我们同时聚焦超混产品研发，并在今年一季度发布了全新超混SUV 4ME，并成功在上市第二天实现交付。超混车型的出现让主流豪华用车人群有了更多选择，也将进一步扩展莲花的市场覆盖，进入更广泛的市场。比如纯电进程较慢的意大利、西班牙、沙特等市场。同时拓展莲花的客群，拥有更广泛的用户基础。
Speaker #4: In 2025, we also focused on hybrid product development, and in the first quarter of this year, we launched our all-new hybrid SUV 4ME Electro X, and delivery started just one day after the launch.
Speaker #4: This hybrid model gives mainstream luxury buyers another great option and lets us reach markets that are moving more slowly towards a full EV, like Italy, Spain, and Saudi Arabia.
Speaker #4: It's also bringing in a broader mix of customers.
Speaker #1: 为了我们将坚持在跑车与生活用车两个赛道持续完善公司的产品矩阵，同时后续我们将推出更多基于路遥架构的超混车型。凭借燃油、纯电、混动、多元的动力形式，满足用户多样的场景使用需求。
Speaker #4: In the future, we will keep strengthening both the sports car and lifestyle vehicle to our lineup, and we will roll out more hybrid builds on our new X Hybrid architecture.
Speaker #4: This gives consumers real choice: combustion, battery electric, or hybrid—whichever fits their needs.
Speaker #1: 今天我也重点把4ME上市的4ME这个产品给大家做个重要的介绍。本次重要的成果发布78年莲花78年历史上，首款超级混动车型4ME。 在欧洲，我们命名为Electro X，以超级混动打破超跑SUV的场景限制，让用户不再为场景做选择，该车型已于26年3月29日正式在中国率先上市，并于3月30日正式在中国开启交付。
Speaker #4: And also, allow me to share with you the progress of the launch of 4ME, which is the first hybrid in Lotus' 78 years in the EU.
Speaker #4: It is as vast as Electro X, like I previously mentioned. It completely changes what a hybrid SUV can do. 4ME was launched in China on March 29, 2026, and deliveries began on March 30.
Speaker #1: 除了在中国上市之前，我们也邀请了欧洲的经销商和欧洲的很多媒体到中国进行了试乘试驾。也得到了极好的反馈。
Speaker #4: Before the launch, we actually invited the dealers and the media outlets from the EU to test the ride and to test the drive for this particular vehicle, and we have received wide positive feedback.
Speaker #1: 4ME首次搭载莲花路遥超混超级混动架构，该架构以900伏高压平台与70度大电池为核心，系统总功率达到952匹马力。在CLTC综合续航超过1400公里，WLTC综合油耗仅仅有0.07升，就是百公里油耗。即使在亏电的情况下，WLTC百公里油耗也只有6.1升。
Speaker #4: 4ME runs on our X Hybrid architecture, a 900-volt high-voltage platform paired with a 70-kilowatt-hour battery and a total output of 952 horsepower. In CLTC testing, it delivers more than 1,400 kilometers of total range.
Speaker #4: Fuel consumption is just 0.07 liters per 100 kilometers in WLTC, and even when the battery is depleted, it's only 6.1 liters per 100 kilometers.
Speaker #1: 4ME凭借强大的动力能够实现零百加速，只需要3.3秒。更重要的是，即使在电量亏电的情况下仅剩10%亏电的情况下，零百加速仍可以达到3.5秒。这个性能永远不在和电量绑定。无论满电还是亏电，性能永远都是在线。同时，这个百公里的刹停距离也做到了33.9米，即使连续12次全力重刹，依然优于国际标准。不仅如此，莲花4ME在四档主动可变尾翼可在170公里的时速下紧急制动时还可以变成空气刹车，提供120公斤的下压力，辅助缩短制动距离。在高速制动工况下进一步辅助提升车身稳定性和制动表现。为驾驶者带来极致的安全保障和驾控信心。
Speaker #4: From 0 to 100 kilometers per hour, Lotus 4ME Electro X only takes 3.3 seconds, and even when the battery is down to 10%, it still hits 3.5 seconds.
Speaker #4: In other words, performance stays strong no matter the battery level. Braking is equally impressive: 100 to 0 kilometers per hour in just 33.9 meters.
Speaker #4: And the car stays above international standards even after 12 heavy stops in a row. Plus, at high speeds, the four-speed active rear wheel can flip into air brake mode at 170 kilometers per hour, generating 120 kilograms of downforce to help shorten stopping distance and keep the car stable, bringing safety protection and driving confidence to drivers and passengers.
Speaker #1: 4ME继续发扬莲花的空气动力学的优势。在4ME上延续了家族式的空气设计语言，低趴的姿态，夸张的风道，每一处线条都服务于空气动力学，全车有四组八条Race Air真实的贯穿式风道，利用稳秋里效应增加下压力。包括低于26度的挡风玻璃设计可以有效降低空气阻力。
Speaker #4: Aerodynamics remain a Lotus signature; 4ME carries forward our porosity design language with a low-purpose force stance and a functional air duct. Every line has a purpose.
Speaker #4: Eight race aeroducts use the Venturi effect to boost the downforce. And the 206-degree windshield angle cut strap effectively.
Speaker #1: 下半年4ME将逐步推向全球市场。欧盟市场的批售业务将于26年的10月底启动，中东市场的车型认证工作预计今年年底前完成。我们计划今年10月在中东开启预售，11月正式在该区域上市，并于12月启动交付。那么英国市场批售业务预计在27年的年中开启。
Speaker #4: 4ME will be gradually launched to the global market in the second half of the year. Also, deliveries in the EU will start at the end of October.
Speaker #4: Certification for Miele is well wrapped 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.
Speaker #1: 展望未来，我们将继续加速产品迭代与市场扩张。一方面推动4ME车型的全球交付放量，同时按计划推进后续车型的研发与上市，丰富产品矩阵。另一方面，深化全球渠道布局与技术合作，持续提升品牌和全球的影响力。
Speaker #4: Looking ahead, we will keep accelerating product updates and market expansion. On the one hand, we will ramp up 4ME global deliveries and, at the same time, advance the R&D and launch of new models as planned.
Speaker #4: On the other hand, we will deepen our channel partnerships and technical collaborations to make the Lotus name even stronger worldwide.
Speaker #1: 再次感谢各位的关注与支持。接下来将时间交给主持人；欢迎大家进行提问，谢谢。
Speaker #4: Thank you again for your time and support. I will now hand it back to the host for your questions.
Speaker #3: Thank you. We will now begin the question and answer session. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced.
Speaker #3: To withdraw your question, please press star 11 again. And if you wish to ask a question via the webcast, please type it into the box and click submit.
Speaker #3: There may be a short pause while we compile the Q&A roster. Once again, it's star 11 for questions. We will now take our first question from the line of Laura Lee of Deutsche Bank.
Speaker #3: Please ask your question, Laura. Your line is open.
Speaker #5: Hey, thank you for taking my question. I want to ask about just thinking about the total deliveries of 2025. We actually went down year-on-year by almost half.
Speaker #5: So, what are the main drivers of this volume decline in '25? And how should we think about the potential impact of the geopolitical situation on future sales?
Speaker #1: 首先，今年整体确实下滑。我们也受到了一些各种因素的影响。那么首先是关税。那么由于关税的不确定性，给我们带来了很大的影响。为公司的库存管理、生产业带来挑战。比如说英美关税，就是美国和英国的关税，导致我们的交付量下滑了有60%左右。电动车由于欧洲的关税和美国关税，也分别影响了我们在欧洲的销售定价，美国市场。那么基本上就进入不了了。那么同时在这个关税的这种影响下，那么对我们的库存也造成了一些压力，清库和救款产品过度。那么为了应对这种24年下半年不确定性，我们开展了主动的清库政策，同时也调整了一下产品线，推出了一些新的产品。新产品由于物流等时间进入各大市场，销量也同比有所下滑。那么25年清库取得了一些进展，欧洲库存和经销商库存都显著下降了40%。库存回归到了一种健康的水平，为26年发力奠定了一些基础。同时我们制定了小而美的战略，让我们的利润有所回升。
Speaker #4: Yes, I do see there's a decrease in delivery volume year on year. And it has been affected by a lot of elements. The first one is the uncertainty of tariffs.
Speaker #4: It has negatively impacted our production and also inventory. For example, the US tariff on UK-made vehicles affected our volumes by about 60%. In addition to that, the EU and US tariffs against Chinese-made EVs have also exerted pressure on our pricing in the EU.
Speaker #4: And for the US markets, basically, it is impossible for us to enter. Those influences have also affected our inventory management and our destocking progress.
Speaker #4: We actively started the destocking in 2025 and adjusted our product lineup. But after the adjustment, the logistics have also taken some time, leading us to some late entry to some markets.
Speaker #4: In 2025, our stock level has been reduced dramatically by 43% to a very healthy level, and it's set a very solid ground for our 2026.
Speaker #4: In addition to that, we've also adopted a lean but efficient organization to help us boost our profit margin.
Speaker #1: 虽然说地缘政治的影响，但其中我们也看到了一些机遇。比如美国和英国关税已经得到了解决，尤其是美国对英国的关税降低到了10%。这样的话，我们Emera在美国的销量，那么得到了比较好的一个恢复。恢复到了一个正常的水平。同时加拿大也宣布了针对中国电动车关税，从原来的100%降到了6.1%。那么这样的话，我们在北美的，尤其是在加拿大的渠道，就可以再去拓展。那么也正是基于我们过去Electra在美国的认证的先机，可以第一波抢到加拿大的红利。目前还有一个比较好的，就是我们Electra PHEV，Electra X PHEV上市以后，那么目前欧洲对中国的PHEV关税仍然保持10%的基础关税。这对我们下半年10月份，我们的PHEV进入欧洲市场，还是非常有利的。这我认为都是比较好的机遇。
Speaker #4: Despite those negative impacts of geopolitics and tariffs, we do see some new opportunities. For example, the tariff between the US and UK has been settled.
Speaker #4: The UK-made vehicles to the US will be charged a 10% tariff. And it is beneficial news for our Emera South. And actually, the Emera South in the US has been recovered to a normal status.
Speaker #4: In addition to that, Canada has also announced a policy towards China-made EVs. The tariff will be lowered from 100% to 6.1%. It is conducive to our exploration in North America.
Speaker #4: Given we have already certified our Electra for the US, it's a good opportunity to leverage such a chance to boost our sales volume. In addition to that, for our PHEV, the EU at this moment currently keeps a 10% tariff on Chinese-made PHEVs.
Speaker #4: So this is also a good window of opportunity for us to launch PHEV in October to EU markets.
Speaker #1: During the美国和欧洲受到了这种关税的影响，但是我们在中国25年表现还是不错的。中国的交付量从2,800多辆增长到2,900多辆，同比增长了3%。增速整体跑赢了中国豪华车市场。中国豪华车40万以上的乘用车市场是同比跌了4.4%。但是我们同比增长了3%。说明联华在我们的产品还是非常具有竞争力。在这种激烈的竞争环境中，能够保持稳健的增长，还是来之不易的。也说明了联华这个品牌也逐步能够得到加强。
Speaker #4: Despite the challenges that we've seen in the US and EU markets, we do see some positive feedback from China markets. Our sales volume has increased from 2,800 to 2,900, an increase of 3% year on year.
Speaker #4: And actually, in 2025, the luxury markets in China priced over 400,000 RMB dropped to 4.4%. But in that circumstance, we actually kept a 3% increase.
Speaker #4: And it is a demonstration that the Lotus product is very competitive. We can achieve stable increase in such a fierce competition. And the brand of Lotus has been gradually recognized in China markets.
Speaker #1: So the尤其是26年，我们这个超级混动推出以后，就可以进入到更广泛的市场。比如说纯电进程比较慢的意大利、西班牙，还有可以达到更广泛的，得到更广泛人群的这种喜欢。对纯电车有里程焦虑的人，就可以选择这种超级混动。所以说未来我们预期26年能够得到有效的体现。
Speaker #4: In 2026, as we are going to roll out the PHEV in different markets, it will help us to reach a wider market. For example, some markets with a slow adoption of EVs, such as Italy or Spain.
Speaker #4: And it will also help us to reach a wider customer group who may have range anxiety about battery electric vehicles. And in the future, we are pretty confident that 2026 is going to be a year for Lotus to recover.
Speaker #1: 同时我们也在拓展新的市场。比如说像巴西市场，我们巴西的已经布局了经销商。门店预计在年中开业。第一批车已经批售出去。
Speaker #4: In addition to that, we're also exploring new markets, such as South America—Brazil. We've already had a dealer there. The showpiece is going to be opened in Midland this year.
Speaker #4: And the first batch of the vehicle has been wholesaled.
Speaker #1: 虽然地缘政治有很大的影响，但其中我们也看到了一些机遇。谢谢大家。
Speaker #4: Again, in summary, despite those negative influences from last year, we see some positive opportunities lying ahead. Thank you.
Speaker #3: Okay, great. Appreciate it, Tyler. Just to follow up on this volume perspective: After the launch of Lotus Formula, the PHEV model, which should have started deliveries by the end of last month, could you provide an update on the current order intake and delivery progress?
Speaker #3: And could you elaborate more about the volume expectation and the strategic positioning of the big model? Thank you.
Speaker #2: 在29号上市以后，总体我们订单量还是符合公司预期的。那么尤其是Formula是联华78年来的首款插电混动车型。它也重新定义了这种真正的高性能，能够兼顾日常。让用户能够有更多的这种场景的选择和应用。从而拓展了用户群体。现在我们在核心平台上，这个品牌人群资产增长了5倍。其中Formula这个咨询类的群体，在抖音平台达到了行业前20。在垂类平台上，那么Formula的日均关注在全国50万以上的SUV排名已经达到了第10。完成了曝光度、用户的曝光度。那么同时这个对我们品牌的认知度也达到了历史的高点。
Speaker #4: After the launch of Formula on March 29th, the order status is actually tallying with our expectations. Formula is the first hybrid model of Lotus in the past 78 years.
Speaker #4: It redefined the high-press SUV. It covers all scenarios. And this is one of the reasons that we can reach a wider customer group.
Speaker #4: Our consumer assets have been increased by five times. And on the Douyin, the TikTok equivalent platform, we ranked the 20th on the vehicle consultation targets.
Speaker #4: And on other integration platforms, for vehicles priced above 500,000 RMB, we ranked 10th. In other words, those indicate that Formula and Lotus gain greater visibility and exposure.
Speaker #4: And wider brand recognition.
Speaker #1: 那么在中国40万以上的混动SUV销量还是在持续增长的。就是23年的销量是14万辆，24年销量已经达到了28万辆。增长将近100%。那么豪华车市场普遍下滑的情况下，混动车型能够保持增长。那么25年也同样得到了一个增长。那么增长能够达到了28万辆，将近29万辆。这个说明混动车型在中国正式发展的时刻。
Speaker #4: So, PHEV—particularly PHEV SUVs priced above 400,000 in China—we see a trend of increasing. In 2022, the total volume of such segment is around 140,000.
Speaker #4: In 2024, it's increased to 280,000. And in 2025, we see it is getting closer to 290,000. In other words, for PHEV in China, now it is a good time to enjoy the benefits.
Speaker #1: 更重要的是联华的通过Formula这个车型，联华的用户群体做到了得到了拓展。过去买我们电动车的大多都是企业主，以企业主为主。现在更多的企业高管在关注我们的车型，购买我们的车型。同时年龄群也得到了拓展。过去我们的年龄群比较年轻，现在的年龄群也年龄也在往上增长。这样的话，真正得到了有效的人群的扩展。
Speaker #4: Lotus Formula helped Lotus to reach a wider customer group in the past. The customer who are interested in our BEV offerings, most entrepreneurs and the owner of a business or business owners, now the company management actually shows their interest in our product.
Speaker #4: And for the target customer age group, previously it was a bit younger. Now, we have reached a more senior age level.
Speaker #1: 包括我们的正反向排名上来讲，宝马X5的用户，还有保时捷、卡宴的用户，成为我们最高的关注度。
Speaker #4: Among all those customer groups, the owners of the BMW X5 and also Porsche Cayenne show the greatest interest in our products.
Speaker #1: 同时这款车下半年在欧洲交付。欧洲的插混车型增长也是非常快的，尤其是随着排放的要求越来越严苛。欧洲的新能源渗透率和中国一样在提速。目前欧洲对中国的PHEV仅收10%的基础关税。那纯电的话是目前我们是28.8%。相当于关税上能够有18.8%的关税的优势。所以说这也是我们在欧洲是一个非常好的一个窗口期。欧洲的经销商也非常有信心。
Speaker #4: We are going to launch this Formula or Electric in the second half of the year to the EU market. And for the EU market per se, the PHEV penetration rate is also getting higher.
Speaker #4: Given the emission regulation is getting stricter, the tariff for Chinese-made PHEVs in the EU is 10%, and for Chinese-made EVs is 28.8%. There's a difference of 18.8%, which means this is a good opportunity that we can leverage.
Speaker #1: 从欧洲的插混车型也在不断地持续地增长。这个25年比24年有显著的7.2%的一个显著的增加。销量主要来自于西班牙、意大利、德国等这些核心市场。尤其是25年的12月份，插混动力车型同比增长了36%。
Speaker #4: In the EU, PHEV are increasing, particularly from 2024 to 2025. There's an increase of 7.2% in some major cities: Spain, Italy, and Germany. And in 2025 December itself, we see an increase of 30% year on year.
Speaker #1: 最主要的混动车型将是公司的产品矩阵更为完善和平衡。它重新定义了动力形式划分的目标市场区域，让主流豪华用车人群有更多的选择。超级混动车型与纯电车型针对不同的细分市场，将其推出进一步拓展我们的市场覆盖面，进入更广泛的市场。比如说意大利、西班牙。
Speaker #4: And overall speaking, the PHEV is going to help us to have a well-balanced product lineup and product portfolio. And given our target is luxury consumers, it gives more options to choose from.
Speaker #4: The BEV and PHEV from Lotus will help us to acquire more market share and wider market coverage.
Speaker #1: Thank you.
Speaker #2: OK, got it. Appreciate it.
Speaker #3: Thank you. We will now take our next question from Brian Launter of Sachs Small Cap Research. Please ask your question, Brian. Your line is open.
Speaker #5: 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.
Speaker #5: 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?
Speaker #1: Thank you, Brian. The company's gross margin improvement in 2025 is driven by three key factors. First, as Nissan has just elaborated, we successfully cleared aged vehicle inventories in the first half of the year.
Speaker #1: Then, the second half saw a higher proportion of new vehicle sales and a significant reduction in overall variable sales subsidies. And second, we continuously reduced material costs through GD's centralized procurement platform.
Speaker #1: And third, we increased the share of the high-margin service revenue, which lifted the overall gross margin. And looking ahead to 2026, despite significant external headwinds, such as continued price increases for car components like batteries and chips—which will put pressure on our gross margin—we expect total procurement costs, production costs, and unit DNA to all decline.
Speaker #1: At the same time, we expect to maintain overall production pricing at current levels, leading to further gross margin improvement. In addition, the ongoing merger with the UK Lotus Cars is expected to enhance our production and R&D efficiency, and further support our gross margin growth.
Speaker #1: Thank you.
Speaker #5: Great, thank you. That's helpful. Obviously, operating expenses were cut significantly in 2025, which helped to narrow your operating loss. Could you talk about any key cost control measures that you've implemented and whether you feel like they're sustainable in 2026?
Speaker #1: Yeah. Thank you. So the company's cost control plan consists of structural long-term initiatives, rather than these temporary measures. Under the R&D front, the company fully leverages GD's R&D and resources.
Speaker #1: Enabling us to reduce investment in general-purpose technologies and focus on catalyzing 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 Nissan has elaborated on.
Speaker #1: And on the management front, the company strictly controls administrative expenses, streamlines the organizational structure, and optimizes the personnel management frameworks to improve operational efficiency.
Speaker #1: And we believe these factors will continue to play a positive role in 2026. Thank you.
Speaker #5: Great. That's all I had, Shisha.
Speaker #1: Thank you.
Speaker #3: Thank you. Thank you very much for the questions, Arnaud. We'll now turn back to the room for questions from the webcast.
Speaker #6: Thank you for all the questions. That concludes the conference call. We will now be answering investor questions via webcast. Our first question is: service revenue grew 69% year over year in 2025.
Speaker #6: What are its core breakdown and key drivers behind?
Speaker #4: Yeah, I'll pick 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.
Speaker #4: 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.
Speaker #4: Thank you.
Speaker #6: Our second question from the webcast is: What implication does the recent rise in global oil prices have on the company?
Speaker #1: 这个尤其油价上涨毫无疑问对新能源汽车来讲是一个很大的机遇，尤其是对我们超级混动这个产品可有可变。既能够满足用户多元的需求，又油耗和电耗都不高。我们说了我们的油耗综合的油耗只有0.07升。即使在亏电的情况下也只有6.1升，尤其对我们的超混车型来讲，毫无疑问这对我们是一个巨大的利好。
Speaker #4: I think it's good news for all for new energy vehicles, 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.
Speaker #4: It caters to all different types of needs from our consumers. And its consumption of both fuel and electricity is very low. As I previously mentioned, your comprehensive fuel consumption is only 0.07 liters per 100 kilometers.
Speaker #4: And even at the depleted status, the fuel consumption is only 6.1 liters per 100 kilometers. So overall, this is a good opportunity for us to catch.
Speaker #1: 尤其是在这个比如说像中东这些国家，这个他们的基础充电的基础设施并不好的情况下，纯电市场在这里做得并不好。但是我们这个超级混动将在这里变成一个很大很大的一个优势和机遇。
Speaker #4: 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.
Speaker #1: 当然也面临了一些挑战，比如说因为油价的上涨，整个产业链的成本在上涨。那么也会导致一些产业链，也就是比如说我们的BOM成本可能会增加，这也是带来不利的因素。
Speaker #4: Of course, we do see some headwinds given the hikes in oil prices. For example, the cost of our supply chain might increase, and the BOM cost might also increase correspondingly.
Speaker #4: And those are some negative influences we may see.
Speaker #1: 当然也会带来一些豪华燃油车这些车企加速新能源品牌的布局，比如说近期保时捷也在推出它的纯电Cayenne。甚至于大众也在用在做一些增程车了。
Speaker #4: And some of these established luxury OEMs may take this opportunity or feel pressure to accelerate their pace into the PHEV arena. For example, we see Bosch has been releasing the Cayenne BEV model, and we also see the Volkswagen Group launching some range extender models.
Speaker #1: 当然我们依然会坚持莲花的品牌精神。做这些差异化的竞争，成为这种个性化市场消费的领先者吧，我们希望布局成一个个性化消费的一个领先者。谢谢大家。
Speaker #4: Of course, for Lotus, we would keep demonstrating our spirit to be differentiated and the customization, and play a leading role on this front. Thank you.
Speaker #3: One of the question and answer sessions, to Ms. Michelle Ma for her closing comments.
Speaker #6: 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 you may have.
Speaker #6: Please feel free to contact us through the contact information on our website. Have a great day. Thank you.
