Lotus Technology's Q3 2025: Contradictions Emerge on Product Roadmap, UK Integration, Gross Margins, and Launch Strategy

Date of Call: November 24, 2025

Financials Results

• Revenue: $137 million, down 46% year-on-year, up 10% sequentially (9M revenue $356 million, down 45% YOY)
• Gross Margin: Improved in Q3 (improved 8% vs prior period), up 3 percentage points sequentially and up 5 percentage points year-over-year

Guidance:

• Full-year gross margin expected to remain in the high single-digit range.
• Next year gross margin expected to be higher driven by PHEV launch reducing per-unit costs, BEV facelift penetration, and efficiencies from Lotus U.K. integration.
• First hybrid (PHEV) model slated to launch in China in Q1 next year with a technology preview in January; European rollout to follow.
• Acquisition of Lotus U.K. expected to complete in 2026 to capture R&D, sourcing and logistics synergies.

Business Commentary:

• Vehicle Deliveries and Revenue Trends:
• Lotus Technology Inc. delivered nearly 1,800 vehicles to distributors in Q3, which represents a 35% decrease year-on-year but a 28% increase quarter-on-quarter.
• Revenue for the third quarter was $137 million, down 46% year-on-year, but up 10% sequentially.

• The decline in deliveries and revenue is attributed to the impact of tariffs, gradual destocking activities, and the phased commencement of upgraded module deliveries.

• 

• Gross Margin Improvement:

• Gross margin improved by 8% in the third quarter, up 3 percentage points from the previous quarter and 5 percentage points from the same period last year.

• This improvement was driven by a favorable shift in sales mix towards upgraded models, reflecting higher inventory dynamics and a continued recovery in underlying profitability.

• Regional Sales Performance:

• Deliveries in the U.S. sports car market began a gradual recovery in the third quarter, following the resolution of initial tariff disruptions with U.K. vehicles securing a favorable tariff rate of 10%.
• Overall, deliveries in the first 9 months of 2025 were primarily driven by China and Europe.
• The recovery in the U.S. market and strong performance in China and Europe reflect the company's ability to adapt to changing market conditions and maintain competitive strengths in premium auto segments.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted sequential recovery (deliveries +28% Q/Q), revenue up 10% sequentially to $137M, gross margin up 3 ppt Q/Q and 5 ppt YOY, operating loss narrowed 41% YOY, and outlined product launches (PHEV) and Lotus U.K. integration to drive future margin improvement.

Q&A:

• Question from Xinran Li (Deutsche Bank AG): 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?
  Response: The PHEV emphasizes both efficiency and high performance (energy‑efficient engine, high‑performance hybrid system, high‑power motor); it targets large, fast‑growing premium PHEV segments in China and Europe and will be previewed in January to accelerate dealer/media engagement.

• Question from Dan Lin (CICC): Do you have any guidance on your gross margin for this year and next year?
  Response: Full‑year gross margin expected in the high single‑digit range; next year management expects higher margins driven by PHEV launch (lower per‑unit costs), greater BEV facelift penetration, and efficiency gains from Lotus U.K. consolidation and shared sourcing.

Contradiction Point 1

Product Roadmap and Launch Timeline

It involves significant differences in the product roadmap and launch timeline for Lotus' plug-in hybrid (PHEV) vehicles, which could impact market expectations and product availability.

Can you highlight the key features of the upcoming PHEV models and the strategic rationale behind them? - Xinran Li (Deutsche Bank AG, Research Division)

2025Q3: The hybrid model will feature a highly efficient engine, top performance hybrid system, and a high-power motor. It will inherit Lotus DNA in handling and performance. It is expected to enter market in 2026. - Feng Qingfeng(CEO & Director)

Can you elaborate on the company's product roadmap and future business outlook, including upcoming product launches and growth trajectory? - Laura (Deutsche Bank)

2025Q2: Lotus will actively promote its Hyper Hybrid technology, with the first vehicle equipped expected to be an SUV launching in Q1 2026. - Qingfeng Feng(CEO & Director)

Contradiction Point 2

Synergies and Integration Timeline with Lotus UK

It involves differences in the expected timeline and the anticipated synergies from the integration and consolidation with Lotus UK, which could impact strategic planning and investor expectations.

Can you provide revenue guidance for this and next year, as well as your expectations regarding synergies from the Lotus UK merger? - Yang Lu(Guotai Junan Securities)

2025Q3: We will see the integration with Lotus UK in the next 12 months. The financial synergies are in the neighborhood of RMB 300 million to RMB 500 million. - Daxue Wang(CFO)

Can you explain the ONE LOTUS strategy, the integration plan, and expected synergies from the merger with Lotus U.K. and the July put option exercise? - Eugene Hsiao (Macquarie Capital)

2025Q2: The merger is expected to close by the end of this year or Q1 2026. - Qingfeng Feng(CEO & Director)

Contradiction Point 3

Gross Margin Expectations

It involves changes in financial forecasts, specifically regarding gross margin expectations, which are critical indicators for investors.

Can you provide guidance for gross margin this and next year? - Dan Lin(CICC Auto team)

2025Q3: Our gross margin for this year is expected to be in the high single-digit range. For next year, we expect a further improvement due to the launch of PHEV products, increased penetration of BEV facelifted products, and integration with Lotus U.K. These factors will reduce per-unit vehicle costs and enhance efficiency. - Daxue Wang(CFO)

The user did not provide a specific question to simplify. Please provide the actual question from the earnings call for me to process. - Daxue Wang(Lotus Technology Inc.)

2025Q1: Our gross margin for the quarter was 12%, an improvement from negative 1% last quarter. This improvement was primarily due to reduced per-unit manufacturing cost from increased production volume and improved operational efficiency. - Daxue Wang(CFO)

Contradiction Point 4

Product Launch Strategy

It involves strategic differences in the approach to product launches, which can impact market positioning and competitiveness.

What are the key highlights of the upcoming PHEV models and their strategic rationale? - Xinran Li(Deutsche Bank AG, Research Division)

2025Q3: The hybrid model will feature a highly efficient engine, top performance hybrid system, and a high-power motor. It will inherit Lotus DNA in handling and performance. The strategic rationale is based on the growing demand for premium plug-in hybrids and extended-range vehicles in China and Europe. - Feng Qingfeng(CEO)

N/A - Demi Zhang(Lotus Technology Inc.)

2025Q1: Our new SUV model, which we set to launch in June, will be well-positioned to deliver a premium driver experience while offering tremendous performance and value to our customers. - Feng Qingfeng(CEO)