Lotus Technology Inc. Warrants Q2 FY2025 earnings call

• New funding arrangements: On August 19, 2025, entered security purchase agreement with ATW Partners for up to USD 300 million convertible notes, and secured funding from Geely via master credit facility framework agreement on July 28, 2025.
• Marketing: Announced return to Goodwood Festival, unveiled Emira Cup race car and concept vehicle Theory 1, saw positive U.K. market sales.
• AI and autonomous driving: Lotus Robotics entered MOU with Middle East partner for AI and autonomous driving collaboration, provides intelligent driving solutions to Lotus and other global auto partners, with global coverage and plans to provide services to 10 more models in next 2-3 years.
• Product pipeline: Model year '26 Emira and Eletre being delivered globally; plug-in hybrid production starts end 2025, deliveries begin Q1 2026; Vision X to launch in 2027; hyper hybrid technology with over 1,000 km range, dual hypercharging, and intelligent chassis system.
• Global market strategy: In China, phase out underperforming outlets, broaden urban coverage; regional delivery balance: North America 20%, Europe 38%, ROW 13%, China 29%; U.K. anchored brand hub for Europe expansion.

In the second quarter, the company delivered over 1,400 vehicles to distributors, a 49% year-on-year decrease. Total deliveries for the first half exceeded 2,800 units, down 43% year-on-year. Revenue narrowed to USD 126 million in Q2 and USD 218 million for the first half, down 44% and 45% year-on-year respectively. Gross margin in Q2 was 5%, down 4 percentage points year-on-year, but first half gross margin was 8%. Lifestyle vehicles accounted for 83% of Q2 deliveries, contributing 68% of first half deliveries. Cost of revenues decreased 42% year-on-year to USD 199 million in Q2 and USD 200 million in the first half. Gross profit was USD 7 million in Q2 and USD 80 million for the half. Operating loss in Q2 was USD 160 million, a 22% year-on-year improvement, and first half operating loss was USD 263 million, a 40% year-on-year decrease. Net loss in Q2 was USD 130 million, down 36%, and first half net loss was USD 313 million, down 32%.

• New funding provides financial support. - Model year '26 Emira and Eletre to continue delivery. - Plug-in hybrid production starts end 2025, deliveries Q1 2026. - Vision X to launch in 2027. - ONE LOTUS consolidation targeting end 2025 closure.

• U.S. tariff policies disrupted Emira deliveries to North America in Q2. - Market volatility and policy uncertainties pose challenges. - Challenges in integrating ONE LOTUS business.

Q: Could you share more details about the company's product road map and the future business outlook?

A: So as we introduced earlier that the powertrain technology, I will say a few more on the powertrain technology. So we will actively promoting our Hyper Hybrid technology. And then the first vehicle to equipped will be an SUV launching into the market beginning delivery to the customer, starting from quarter 1 next year. So -- and also, you can see in the presentation deck that we have another vehicle, it's a new type of vehicle also will be equipped with the Hyper Hybrid technology. It will have the strong embedded Lotus DNA inside with the performance targeted product definition. So as a global brand, every single products that we develop, we are developing into global standards and global compliance. So basically, that's for Eletre, Emira, we have the homologation of majority of the markets, including the U.S. However, that we have seen the US tariff fluctuations throughout this year. So we expect that with ease -- we expect if the tension is eased then we will be hoping to divert those vehicles into the United States again. In terms of our proud Emira sports car, so we are having a facelift in the 2027 due to the EU7 kick in. So for that, we are planning to have an upgrade on our V6 engine and also plug-in hybrid as an alternative.

Q: I'd like to ask about the put option that was exercised, I think, in early July and the expected merger with Lotus U.K. Could you please help explain the ONE LOTUS strategy and then how you plan to integrate this business and any expected synergies?

A: So on the ONE LOTUS. So basically, as per current status, so we have the Lotus cars in the U.K. who develop and manufacture sports cars, and we have Lotus Tech to develop and manufacture the lifestyle vehicles. So in terms of consolidation plan that we see big room for efficiency improvement while we consolidate a lot of the functions together, so including the technology synergies. So basically, that we introduced the Emira. Once we have done the consolidation of ONE LOTUS, so Lotus U.K. will be also enjoying the Lotus Tech's Hyper Hybrid -- plug-in hybrid solution. And then we have also ambitious goals for the Lotus cars operation in the future that we will focus on the very high performance attributes and also the high-performance engineering services that we can seek external clients. And then as per the Lotus Tech operation in China that we will focus on the intelligent and then also electrification, engineering and development in China, while we have the synergies between both. Because the company has delivered all the prerequisites of the put option in 2024, so we are -- and then also the consolidation plan has been officially approved by the Board. So we are now in the process of closing. We are targeting to close the deal by end of this year, no latest by quarter 1 next year.