Lotus Technology Inc. American Depositary Shares (NASDAQ:LOT) Q3 2025 Earnings Call Transcript

Lotus Technology Inc. American Depositary Shares (NASDAQ:LOT) Q3 2025 Earnings Call Transcript November 24, 2025

Operator: Good day, and thank you for standing by. Welcome to Lotus Technology Inc. American Depositary Shares third quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. 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.

Michelle Ma: Thank you, Amber. Welcome to Lotus Technology Inc. American Depositary Shares third quarter 2025 earnings call. My name is Michelle Ma, the Head of Investor Relations here at Lotus Technology Inc. American Depositary Shares. With me today are CEO, Mr. Qingfeng Feng, and CFO, Dr. Daxue Wang. Our conference call materials were issued today and are available on our Investor Relations website. 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 US 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 Technology Inc. American Depositary Shares with the US Securities and Exchange Commission. The company undertakes no obligation to update any forward-looking statements except as required under applicable law. Please also note that our earnings press release and this conference call will include the disclosure of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. You can also find a reconciliation of these figures in the press release available on our Investor Relations website at ir.group-notice.com. With that, I’m delighted to turn the call over to our CFO, Dr. Wang, please.

Daxue Wang: Good morning, good afternoon, and good evening, honored shareholders, analysts, and friends from the media. Thank you for joining us for Lotus Technology Inc. American Depositary Shares Q3 2025 earnings release. I’m Daxue Wang, Chief Financial Officer of Lotus Technology Inc. American Depositary Shares. It is my privilege once again to present the company’s unaudited financial results. In the third quarter, the company delivered nearly 1,800 vehicles to distributors. This represents a 35% decrease year-on-year but a 28% increase quarter-on-quarter. As a result, total delivery for the first nine months of the year reached 4,612 units, down 40% compared to the same period last year. These figures reflect a transitional period characterized by the impact of tariffs, gradual destocking activities, and the phased commencement of gradually upgraded module deliveries.

Revenue for the third quarter was $137 million, down 46% year-on-year, but up 10% sequentially. Revenues for the first nine months totaled $356 million, down 45% year-on-year. Gross margin improved to 8% in the third quarter, up three percentage points from the previous quarter and five percentage points from the same period last year. This improvement was driven by a favorable shift in our sales mix towards upgraded models reflecting healthy inventory dynamics and continual recovery in our underlying profitability. Gross margin for the first nine months remained stable compared to the same period in 2024, safely in positive territory. Now allow me to break down our sales by category and region. By category, lifestyle vehicles accounted for 77% of the total deliveries in Q3, down from 83% in Q2, contributing 72% of the total deliveries for the first nine months of the year.

In terms of regions, deliveries in the US sports car market began a gradual recovery in the first quarter. This improvement came after the initial US, UK tariff disruptions were resolved, with UK vehicles ultimately securing a favorable tariff rate of 10%. Overall, deliveries in the first nine months of 2025 were primarily driven by China and Europe. It’s worth noting that our delivery growth in China for the first nine months outpaced the broader premium auto segment in the country. This underscores the competitive strengths of our product portfolio in an increasingly challenging environment. Now let me turn to the key financials. As I already covered deliveries, revenue, and gross margin, I will proceed to other financial metrics. The cost of revenue decreased by 35% year-on-year to $126 million in Q3 and a total of $327 million for the first nine months of 2025.

This resulted in a gross profit of $11 million for the quarter and $29 million for the first nine months. We reported an operating loss of $95 million in the third quarter, a 41% improvement year-on-year. The net loss for the quarter was $65 million, a 68% improvement year-on-year. For the first nine months, the operating loss was $370 million, narrowing by 40% year-on-year, while the net loss narrowed to $378 million, down 43% year-on-year. For your reference, on a non-GAAP adjusted basis, the net loss for the first nine months was $2 million lower, primarily due to the impact of share-based compensation. Adjusted EBITDA under the non-GAAP for the same period narrowed by 48% year-on-year to $294 million. Beyond these numbers, I would like to reiterate that we have now reduced operating expenses for eight consecutive quarters through value-added measures.

This underscores our strong commitment to operational efficiency. Our efforts in cost discipline and image optimization are reflected in the significantly narrowed loss for both the quarter and the year-to-date. We remain focused on prudent resource allocation and margin enhancement while also preparing for a more dynamic operating environment in the quarters ahead. During the third quarter, we achieved several key milestones amid challenges posed by fierce market competition. We will be unveiling our new PHEV model in the coming months to further expand our electrification product roadmap and to meet consumer demand in diversified powertrain segments. Our CEO, Mr. Feng, will elaborate further on these developments. With that, I will now turn the floor over to Mr. Feng.

Qingfeng Feng: Thank you. Good morning, good afternoon, everyone. I’m Qingfeng Feng, CEO of Lotus Technology Inc. American Depositary Shares. Thank you for joining the Lotus Technology Inc. American Depositary Shares quarter three 2025 earnings call. Now I’d like to walk you through the company’s latest progress across four key areas: recent highlights, market strategy, product portfolio, and the acquisition of Lotus UK. Zero One Electra, Emira, and Mira. For Lotus, with a 77-year track DNA, it is important to keep enhancing its global image. On September 5, Lotus Technology Inc. American Depositary Shares made a strong appearance at IAA Mobility 2025 in Germany, showcasing the concept car Theory One Electra EMEA, and the Mira, demonstrating a seamless blend of brand legacy, cutting-edge technology, and electric strategy. The 2025 Lotus car one-make racing series kicks off in June, featuring an international lineup of drivers.

George Tang: The third round concluded successfully in Chengdu, with a season finale set to take place in Sepang International Circuit in Malaysia this month. On September 14, during the London Design Festival, Lotus served as the official automotive partner and opened an immersive exhibition at our Mayfair showroom, exploring the design DNA of the brand and receiving positive feedback from the public.

Qingfeng Feng: On November 16, driver Lu Wenlong piloted the Mira GT4 to a third-place finish in the Macau Grand Prix with the Bay Area GT Cup. This marks back-to-back podiums for the Mira GT4 following its first and second-place finishes in the same event in 2023. The Macau circuit is known for its long straights and tight twisting corners, regarded as one of the most challenging street circuits. This double podium not only highlights the driver’s exceptional skills but also underscores the outstanding performance and reliability of the Mira GT4. It strengthens customers’ trust and enthusiasm for our sports car, carrying over Lotus’ racing track DNA.

George Tang: For market strategy, Lotus Technology Inc. American Depositary Shares continues to optimize our global presence and enhance our retail efficiency. As of September, we had 213 retail stores worldwide, with a well-balanced distribution across four key regions: Europe with 70 stores, China with 54, North America with 49, and other markets with 40. This covers roughly 45 markets globally. Besides the retail channel efficiency improvement, we’ve also explored other measures to reduce our costs and improve our efficiency. For example, we’ve implemented prudent cost control measures and optimized our store portfolio. This includes relocating high-cost stores, closing underperforming locations, and expanding high-efficiency outlets.

It helped boost our conversion rates while reducing operating costs. In addition to that, we’ve also relocated our European headquarters from The Netherlands back to The UK, cutting operational expenses and allowing us to focus resources on key markets. Returning to London’s birthplace also helps us better tell the brand story and strengthen our reach across Europe and beyond. Such measures further improve our overall efficiency. We are also preparing to enter new markets, starting with Brazil. Brazil is the seventh-largest automotive market in 2024, with total sales of roughly 2 million and a new energy vehicle penetration rate of around 8%. In the first nine months of this year, total sales reached 1.44 million units, with a penetration rate of new energy vehicles increasing to 10.1%.

As for our product portfolio, two years ago, we planned on that. Actually, we’ve already launched our hybrid technology, and we believe that all of you will soon see the fruits. For Lotus Technology Inc. American Depositary Shares, we currently offer two models globally, including the Mira, Electra, and Mira, all of which were updated in 2025. The new versions have all been well received, with their share of total sales continuing to grow. We plan to introduce two additional hybrid models based on our new architecture. The first hybrid model is set to launch in China in the first quarter of next year, with a dedicated technology preview event in January and a European release. The new hybrid also carries over inherited DNA in the following areas.

The first is ultimate handling, thanks to Lotus’ engineering. It is also equipped with dual-chamber air suspension and an expanded 48-volt active stabilizer. It is capable of a long range and high performance, enabled by the latest architecture delivering over 1,000 kilometers of range and 952 horsepower. It also features an inspired design, with the sensational width-to-height proportion of our hypercar, staying true to Lotus’ design DNA.

George Tang: The introduction of the hybrid model offers more choice for luxury vehicle buyers and will help us expand into broader markets, including regions with slower EV adoption such as Italy, Spain, and Saudi Arabia. It will also help us attract new customer segments. For the acquisition of Lotus UK, we are now making steady progress on the merger or acquisition of Lotus UK, which we expect to complete in 2026. After the acquisition, we will operate under our “One Lotus” strategy. We plan to maintain a consistent global identity as a high-performance premium luxury brand to strengthen worldwide recognition and maximize our heritage. We are also streamlining reporting lines to enable faster, clearer decision-making. A globally aligned governance model, with global standards and regional adaptation, will improve oversight and support medium to long-term strategy execution.

For our business integration, we are driving synergy across key areas. In R&D, we consolidate global engineering under one team to improve efficiency, share technology, and accelerate new vehicle development. In purchasing, we leverage shared sourcing to reduce costs across lifestyle vehicles and sports cars. In logistics, we will optimize warehousing and parts distribution to further lower costs. We have also aligned channels and systems globally to eliminate duplication and boost brand value and operational effectiveness. Thank you. We will now open the line for your questions.

Operator: Thank you. We will now begin the question and answer session. Press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Translate your questions to English right away. We will now take our first question from Laura Lee from Deutsche Bank. Please go ahead, Laura.

Q&A Session

Laura Lee: Hey. Thank you for the opportunity. Could you elaborate a little bit more about the key highlights of the upcoming PHEV models? And maybe talk more about the strategic rationale behind those products? Thank you very much.

Qingfeng Feng: Thank you for your question. First, allow me to elaborate on the highlights or features of our hybrid model. It features three firsts: it has the best energy-efficient engine, the best performance high hybrid system, and the highest power motor. These three features demonstrate the Lotus DNA from both the handling and performance perspective. As for the details about how to further enhance its handling and performance, as well as the details of our hybrid architecture, please stay tuned to our tech preview event in January. Also, we would like to elaborate on the strategic rationale behind our hybrid model. First, I’d like to start with the market. For the China market, the premium vehicle market in China, including plug-in hybrids and extended ranges, makes up a large and rapidly growing segment among new energy vehicles priced above 400,000 RMB.

About 47-70% are plug-in or extended range models, and their growth is a major driver of broader new energy vehicle expansion. The penetration rate of new energy vehicles in this price bracket has also risen quickly, reaching over 40% from January to September. Within that, plug-in and extended ranges accounted for more than 30%. The competition in China’s premium hybrid SUV segment is still relatively underdeveloped. The premium hybrid SUV segment means the price is over 500,000 RMB, and the development is relatively underdeveloped compared to the battery electric SUV space. Most current models also lean heavily toward business or off-road use. This creates a clear opening for Lotus Technology Inc. American Depositary Shares to introduce our hybrid models.

In Europe, hybrid models represent a large and growing share of the auto market. As emission standards tighten, new energy vehicle adoption is accelerating in Europe, just as it is in China. From January to September this year, NEVs, including battery electric vehicles, plug-in electric vehicles, and hybrid electric models, reached 59-60% of the total market. Among those NEVs, PHEV and HEV together accounted for about 73%. Notably, plug-in hybrid sales have surged in Europe. As of September, PHEV sales have grown year-on-year for seven consecutive months, with EU-wide sales up 65% in September alone. In the premium hybrid segment, Lotus Technology Inc. American Depositary Shares will be the first to introduce such a model in the EU. Last week, I visited the EU, and I heard positive feedback from our dealers when they learned about this hybrid model.

In the successive phase, we are going to invite dealers and media to have an in-depth test of our new models.

Laura Lee: Thank you.

Qingfeng Feng: Okay. The first one is the color.

Operator: I’m looking forward to the launch. Our next question comes from Dunlin Ren from CICC.

Dunlin Ren: Hello? This is Dunlin from CICC auto team. Thanks for taking my call, and congrats on your sequential improvements. I have one question about your gross margin. Do you have any guidance on your gross margin for this year and next year?

Daxue Wang: Hi, Dunlin. Thank you so much for your question. With the recovery of the vehicle gross margin in the second half of the year, our gross margin for the full year is expected to remain at a high single-digit range. Looking ahead, gross margin is projected to further improve, primarily due to the following factors. First, the launch of the PHEV products, which is based on our Luoyang architecture, will further reduce the per-unit vehicle costs and achieve higher gross margins. Second, as BEV fixed-lifted products penetrate global markets, their sales are expected to increase, thereby boosting the gross margins. Third, the implementation of the put option with Lotus UK will further enhance efficiency. For instance, the manufacturing segment’s gross profit will be consolidated into the listed companies, and economies of scale resulting from the integration of the supply chain and research and development will contribute to higher gross margins.

So I think for next year, we have confidence it is going to be higher than this year. Thank you so much.

Dunlin Ren: Thank you. That’s all from me. Very clear. Thank you.

Operator: I am showing no further questions at this time. With that, I’ll now turn the conference back to Ms. Michelle Ma for her closing comments.

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

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