Following the ringing of the Nasdaq bell in February, Lotus once again presents itself on the luxury electric track with its first post-listing report card.
On the evening of April 8th, Lotus Technology Co., Ltd. (hereinafter referred to as "Lotus", LOT.US) released its unaudited financial report for the fourth quarter and full year ended December 31, 2023, which is also the first performance report since its listing on Nasdaq in February this year.
The financial report shows that Lotus achieved annual revenue of $679 million in 2023, with a gross profit of approximately $102 million and a gross profit margin of 15%. The fourth quarter performance was remarkable, contributing revenue of $361 million, a quarter-on-quarter increase of 92%, with a gross profit margin rising to 19%, and profitability steadily improving. The total delivery volume for the year reached 6,970 vehicles, setting a record for annual deliveries in the 76-year history of the Lotus brand, with electric vehicle models accounting for 63% of the total deliveries.
Benefiting from the surge in production and sales volume of Lotus electric vehicles, Lotus delivered an impressive "answer sheet" in the first year of delivery of electric lifestyle models.
With global capital injection, Lotus clearly harbors greater "ambitions". In 2024, it aims to challenge revenue to increase to $2.5 billion to $2.7 billion, with total deliveries increasing by about three times to 26,000 vehicles, and a gross profit margin improving to 17%-19%.
As a "pioneer" in electrification among ultra-luxury brands, Lotus's "Vision80" brand revitalization plan is entering the "second half", accelerating its comprehensive transformation towards electrification and intelligence. On the road to becoming the "million-level luxury pure electric first brand", Lotus also possesses more "chips".
$679 million in revenue: Steady Financial Development
In the full year of 2023, Lotus achieved revenue of $679 million, with a gross profit of approximately $102 million. The fourth quarter performance was remarkable, contributing revenue of $361 million, a significant increase of 92% compared to the previous quarter.
According to its prospectus, Lotus had revenue of $3.687 million in 2021 and $9.557 million in 2022. In contrast, in 2023, the first year of delivery for electric lifestyle models, Lotus achieved a growth of over 70 times in annual revenue, benefiting from the surge in production and sales volume of electric vehicles, with economies of scale continuously expanding.
Supported by its light asset model, Lotus will continue to expand its presence in global markets, with the brand's sales scale expected to continue to increase. It is projected that the company's revenue will increase to $2.5 billion to $2.7 billion in 2024.
In addition to the expansion of revenue scale, Lotus' more remarkable market performance in 2023 was its gross profit margin maintaining at 15%, even reaching as high as 19% in the fourth quarter, which is quite remarkable given the automotive industry's struggle with a "price war" in 2023.
Over the past year, the automotive market has been ablaze with an escalating "price war." To safeguard themselves and stand out from the fiercely competitive market, car manufacturers have had to lower prices to compete for market share. Amidst the trade-off of price for volume, the gross profit margins of most new energy vehicle companies have shown a downward trend year after year. As the price war deepens, some have even found themselves in the predicament of negative gross profit margins, struggling to break free.
Comparatively, Lotus achieved a 15% gross profit margin in its first year of listing, fully validating its brand premium capability. Why can Lotus convert gross profit margin into its own advantage against the backdrop of the "price war"?
"For a 15% gross profit margin, we internally consider it a good figure, and we will continue to improve the gross profit margin level in the future," said Lotus Technology CEO Feng Qingfeng. In the luxury car market, merely relying on simple "value for money" is not enough to impress users. Instead, it's about providing emotional value beyond the product value to users.
"The competition logic in the luxury car market should not be just about the 'price war,' and the 'price war' is not sustainable. Market competition relies on product and additional emotional value beyond the product. From Lotus' global order data, we have already proven this path," Feng Qingfeng believes. In Feng's view, the "value" in "value for money" refers to "price," while "value" is "rational" and "emotional," that is, emotional value. Only by continuously creating emotional value for users can brands achieve higher gross profits.
Therefore, as a super-luxury brand, Lotus has not relied on engaging in a "price war" to attract users, but rather, by creating additional value for users, it has maintained a healthy and good gross profit margin level, demonstrating strong profitability.
In 2024, the "price war" has undergone several upgrades in just the first quarter alone. Despite fiercer industry competition, Lotus expects its gross profit margin to continue to increase to 17%-19% in 2024, with profitability and positive cash flow expected to be achieved by 2026. By then, the gross profit margin will remain above 20%, with sales expected to be around 50,000 to 60,000 units.
Currently, there are only three profitable car companies globally: BYD, Tesla, and Ideal Auto. Tesla took 17 years to turn a profit, while Ideal Auto took 8 years. All three profitable car companies have achieved a certain scale.
Having proposed the "Vision80" brand revitalization plan in 2018 and transitioning comprehensively to electrification and intelligence, Lotus has set itself a more challenging goal and demonstrated the confidence in its existing performance and development. Its brand premium capability and profitability are challenging the industry's leading players, striving to become the "top luxury pure electric brand" with anticipated market trends and potential.
Globalization Strategy Accelerates Landing in 24 Countries and Regions
Born in the UK, transformed in China, and developed globally, Lotus, with its "internationalization" genes, aims to leap to the global stage and become a global enterprise. Committed to accelerating the landing of its globalization strategy, Lotus is also moving towards its goal of leading the global luxury pure electric market. In 2024, it will achieve deliveries in 24 countries and regions.
According to financial reports, as of December 31, 2023, Lotus' global store count has expanded to 215, with China and Europe remaining its two major markets, and flagship stores added in global strategic cities such as Paris, London, and Seoul.
According to the plan, Lotus will enter core markets such as Malaysia, the Middle East, Australia and New Zealand, Japan, Korea, and the United States this year, simultaneously expanding its global sales network. By 2025, Lotus plans to expand its global store count to over 300, enhancing its global brand operation capabilities.
In addition to the accelerated globalization layout of its distribution network, Lotus' global manufacturing genes have also created favorable conditions for it.
It is reported that Lotus' global marketing center is located in London, and its global design center is also in the UK; seizing China's "regional capability" in electrification and intelligence, it has established Lotus' model research institute in China; innovation centers are distributed in Germany, mainly focusing on intelligent chassis.
With a global layout and production, Lotus will further accelerate the delivery of its leading product portfolio in new markets. In March of this year, Lotus' first pure electric supercar Emeya Flourish has begun delivery in China, with deliveries expected to be achieved in Europe in the third quarter of 2024; its luxury pure electric supercar SUV Eletre will also gradually enter more markets, including the United States.
Based on current order data from multiple global markets, Feng Qingfeng expresses optimism about delivery expectations for this year. In the US market, although delivery of daily use vehicles has not yet begun, market and order feedback after user test drives has been positive, and the number of orders for sports cars in the US market has exceeded expectations. In the Middle East market, the delivery volume of sports cars in just one city, Dubai, exceeded 100 units last year, and this year aims to reach a target of 400 units.
In fact, the current development of the domestic new energy vehicle industry in China is flourishing. While it is expanding domestically, it is also seeking to increase volume in overseas markets, starting to expand outward. However, while aggressively targeting overseas markets, automotive companies are faced with challenges such as geopolitical issues, trade protectionism, low brand recognition, low visibility, and the impression of being associated with low-priced cars. Therefore, despite the emergence of high-end brands and models in the Chinese new energy vehicle market, expanding globally remains difficult.
Born in the UK, transformed in China, and developed globally, Lotus, which has gathered the "genes of globalization," obviously has more advantages in the path of global development.
Taking the challenging US market that new energy vehicle companies struggle to conquer as an example, Feng Qingfeng stated that the US, as the world's largest luxury car market, has a longer and deeper tradition of luxury car consumption compared to Chinese users. Lotus itself has many enthusiasts and fans in the US market, and its visibility is higher than in the Chinese market. It is expected that the delivery volume in the US market this year will account for about 20% of the total delivery volume.
As a legendary brand with a history of 76 years, Lotus's global brand recognition and the acceptance of its open approach to global markets further strengthen its label of "globalization." According to Feng Qingfeng, in the future, Lotus's sales distribution will be 40% in China and 60% overseas.
Annual delivery volume reaches a historic high
In 2023, as the first year of delivery after Lotus's pure electric transformation, the scale of electric vehicle production and sales continued to increase.
Lotus Technology's cumulative delivery volume reached 6,970 vehicles in 2023, setting a new annual delivery record for the Lotus brand in its 76-year history, with electric vehicle models accounting for 63% of the total delivery volume. In the fourth quarter alone, deliveries reached 3,749 vehicles, an increase of nearly 110% compared to the previous quarter, with both growth rate and increment being remarkable.
Lotus stated, "The growth in delivery volume is mainly due to the expansion of production and sales of our first pure electric daily use car, Eletre, in the second half of the year."
"In 2023, our delivery time in the Chinese market was three quarters, and one quarter in the European market, with a total delivery volume of nearly 7,000 units. As the first delivery year after Lotus's pure electric transformation, achieving this result is quite satisfactory internally," Feng Qingfeng said.
Based on model expansion, channel expansion and upgrades, and the continuous implementation of its globalization strategy, Lotus expects its total delivery volume for the full year of 2024 to increase approximately threefold to 26,000 units. This will be a key factor in achieving our delivery goals.
To achieve this goal, Lotus's top priority is to continue expanding its product lineup. In addition to its existing four products—EVIJA, EMIRA, ELETRE, and EMEYA—a high-performance D-class SUV is expected to debut in 2025 or 2026, and another all-new electric sports car is expected to be unveiled as a concept car this year.
In fact, the luxury car market represented by Lotus has always been a focus in the automotive industry for centuries. However, driven by electrification and smart technology, standing at the "crossroads" of automotive industry transformation, the development of the luxury car market is undergoing differentiation.
According to Feng Qingfeng, in the luxury car market, the growth rate of traditional fuel vehicles is very low, only around 2%-3%. However, the luxury pure electric vehicle market is experiencing continuous growth, showing significant potential with a positive development trend.
Focusing on the Chinese market, according to statistics from the China Association of Automobile Manufacturers (CAAM), the penetration rate of new energy vehicles in China reached 31.6% in 2023, and it is expected to further increase in 2024. Breaking it down by category, D-segment new energy vehicles saw a surge of over 160%, while the market size of C-segment new energy vehicles grew by a staggering 73%. The luxury electric vehicle sector is undergoing a round of consumption upgrades in the Chinese car market, demonstrating strong growth momentum.
The divergence between pure electric luxury and fuel-based luxury is also evident in the development of the domestic high-end market over the past two years.
Represented by BBA, the "old luxury" brands are fiercely holding their ground. Relying solely on traditional fuel vehicles no longer captivates Chinese consumers. Innovative electrified products are more appealing. Emerging "new luxury" brands from domestic manufacturers are making waves, with high-end brands and models entering the fray. Brands like NIO, XPENG, and WM Motor continuously break through price barriers, making pure electric luxury vehicles highly competitive products.
"The penetration rate of luxury pure electric vehicles is relatively high in Europe and the UK, but not so in China. Compared to Europe and the UK, we believe the future of China's luxury pure electric vehicle market is promising," said Feng Qingfeng.
However, with the promising outlook of the Chinese luxury pure electric vehicle market, more and more competitors are entering the fray. Domestic brands, traditional brands, and new players in the automotive industry are all vying for dominance. In the face of market dynamics characterized by "price wars" and fierce competition, standing out and gaining market share in the high-growth but small-scale luxury pure electric market is no easy feat.
In response, Feng Qingfeng expresses confidence, stating, "More players entering the market will help expand the pie, which is what we very much hope to see." In his view, Lotus's advantage lies in being the world's first supercar brand to undergo comprehensive electrification transformation, giving it a clear first-mover advantage. While the luxury pure electric product offerings currently in the market are not yet abundant, Lotus already has four models, putting it ahead of competitors.
Focusing on the luxury pure electric segment, Feng Qingfeng believes it's not just a market sustained solely by "price." It requires delivering more value to captivate users, such as brand satisfaction, service satisfaction, and product satisfaction. In contrast to engaging in price wars, luxury brands in the Chinese market need to focus on excelling in technology, providing excellent services, establishing connections with users, and offering emotional value.
It's worth mentioning that adhering to its brand proposition of "For the Drivers," Lotus recently launched the Lotus Chapman Bespoke premium customization service, enhancing the user's car-buying experience, demonstrating Lotus's attention to user needs and service upgrades.
Today, with the "3+3" (3 sports cars + 3 lifestyle vehicles) product matrix taking shape, sales volume is synchronously increasing. After launching the "Vision80" strategy in 2024, Lotus is one step closer to becoming a leader in the luxury pure electric vehicle market.
