Lotus Technology NASDAQ: LOT reported lower vehicle deliveries and revenue for the fourth quarter and full year 2025, while emphasizing improved gross margin and reduced losses as the company worked through tariff disruption, inventory actions, and a shifting product mix. Management also highlighted the early progress and strategic importance of its first plug-in hybrid model, For Me (sold as Eletre X in the European Union), as it seeks to broaden demand in markets where battery-electric adoption is slower.
2025 deliveries and revenue fell amid tariffs and competition
Chief Financial Officer Daxue Wang said the company delivered 1,908 vehicles in the fourth quarter, including 1,239 lifestyle SUVs and sedans and 670 sports cars. Full-year 2025 deliveries totaled 6,520 units, which Wang said represented a 64% year-over-year decrease, citing a year “marked by the impact of tariffs, the phased start of the upgraded models deliveries, and intensified market competition.”
Total revenue was $163 million in the fourth quarter, down 40% year-over-year, and $519 million for the full year, down 44% year-over-year. Wang said sales of goods fell 48% to $463 million on lower volume, while services revenue rose 69% to $56 million, “primarily due to the R&D service revenue.”
Gross margin improved as inventory cleared and services grew
Wang said gross margin improved to 10% in the fourth quarter from -11% a year earlier. For the full year, gross margin improved to 9% from 3% in 2024. He attributed the improvement to the global rollout of upgraded models, a more favorable sales mix, “healthier inventory dynamics,” and cost control.
During the question-and-answer session, Wang cited three main drivers of the margin improvement:
- Clearing aged vehicle inventory in the first half of the year, followed by “a higher proportion of new vehicle sales” and reduced variable sales subsidies in the second half.
- Lower material costs through Geely’s centralized procurement platform.
- A higher share of “high-margin service revenue.”
Asked about the durability of service revenue, Wang said service revenue is mainly comprised of R&D service revenue and vehicle service income, and that in 2025, R&D service revenue represented over 75% of the total. He said the customers include “first-tier OEM manufacturers,” which he said demonstrates market recognition of the company’s R&D capabilities and ability to commercialize intellectual property.
Losses narrowed as operating expenses declined
Wang said operating loss narrowed 65% year-over-year to $66 million in the fourth quarter, adding that sequential quarterly reductions in operating losses reflected a focus on operational efficiency. For the full year, Wang said operating loss narrowed 46% year-over-year and net loss decreased 58% year-over-year. On a non-GAAP basis, adjusted EBITDA improved 63% year-over-year to a loss of $356 million, compared with a loss of $961 million in 2024.
Expense reductions were broad-based. Wang said full-year R&D expense was $171 million, down from $275 million in 2024, reflecting “targeted prioritization” of technology investments. Selling and marketing expense fell to $153 million from $322 million, and general and administrative expense declined to $136 million from $227 million.
Asked whether cost controls are sustainable, Wang said the plan is built on “structural long-term initiatives rather than these temporary measures.” He said the company is leveraging Geely R&D resources to improve R&D efficiency, managing marketing spend more dynamically, and streamlining organizational and administrative structures.
Regional mix and tariff impacts shaped 2025 performance
Wang said 45% of full-year deliveries came from China, 34% from Europe, 16% from North America, and 5% from the rest of the world. He also said sports car deliveries to North America posted “remarkable” quarter-over-quarter growth in the fourth quarter despite a 5% local price increase. Wang said earlier tariff hikes weighed on second-quarter sales, while a reduction in U.S. tariffs on U.K. auto imports to 10% brought more policy clarity, and he described a recovery in U.S. sports car sales in the third and fourth quarters.
In response to a question about the delivery decline, Chief Executive Officer Qingfeng Feng, speaking through a translator, pointed to tariff uncertainty and its knock-on effects on production and inventory. Feng said the U.S. tariff on U.K.-made vehicles affected volumes “about 60%,” and said U.S. and EU tariffs against Chinese-made EVs pressured pricing in Europe, while “for the U.S. market, basically, it is impossible for us to enter,” in reference to Chinese-made EVs.
Feng said Lotus began destocking in 2025 and adjusted its product lineup, which also contributed to later market entry due to logistics. He added that stock levels were reduced “by 43% to a very healthy level,” which he said set a foundation for 2026.
Despite geopolitics, Feng cited “new opportunities,” including the U.S.-U.K. tariff settling at 10%, which he said is beneficial for Emira sales and that “Emira sales in the U.S. have been recovered to a normal status.” He also said Canada announced a change that would lower tariffs on China-made EVs “from 100%-6.1%,” which he described as supportive of North American expansion, given the Eletre is already certified for the U.S.
Feng also highlighted what he characterized as resilience in China, saying Lotus sales volume in China increased about 3% year-over-year even as the luxury market segment priced above RMB 400,000 declined. He added the company is exploring new markets, including Brazil, where he said a dealer is in place and a shop is expected to open mid-year, with a first batch of vehicles already wholesaled.
Hybrid For Me/Eletre X positioned to broaden the addressable market
Feng described 2025 as a turning point in the company’s strategic transformation and said Lotus is developing its product lineup with expanded powertrain options, including hybrids. He said new variants of Emeya, Eletre, and Emira were launched and delivered in major markets in 2025, and that the sales proportion of new models increased.
Feng said Lotus launched its first hybrid model in 78 years, the For Me (Eletre X in the EU), in the first quarter of 2026, with deliveries beginning one day after launch. He said For Me aims to address markets moving more slowly toward full EVs—citing Italy, Spain, and Saudi Arabia—and to reach customers with range anxiety.
On early demand, Feng said orders since the March 29 launch were “actually tally our expectation,” and he said the model has increased the company’s consumer reach. He cited visibility metrics in China, including ranking “20th on the vehicle consultation targets” on Douyin and “10th” on an integrated platform for vehicles priced above RMB 500,000.
Feng also discussed the market backdrop for premium PHEVs in China, citing growth in the PHEV SUV segment priced above RMB 400,000. He said Lotus is seeing interest from a broader demographic, including company management, and that owners of the BMW X5 and Porsche Cayenne have shown notable interest.
For Europe, Feng said the tariff on Chinese-made PHEVs is 10% versus 28.8% for Chinese-made EVs, calling the difference an opportunity. He said For Me/Eletre X will be launched gradually globally in the second half of the year, with wholesale deliveries in the EU beginning at the end of October.
Looking ahead, Wang said the company expects further gross margin improvement in 2026 despite headwinds such as higher battery and chip costs, citing expectations for declining procurement costs, production costs, and unit depreciation and amortization, while maintaining pricing. Wang also said an “ongoing merger with the U.K. Lotus Cars” is expected to enhance production efficiency and support gross margin growth.
During a webcast question about rising oil prices, Feng said higher oil prices could be “good news overall for new energy vehicle,” particularly for PHEVs, and reiterated For Me’s flexibility to operate on fuel or battery. He also noted potential headwinds, including higher supply chain and bill-of-material costs, and said higher oil prices could spur more luxury OEMs to accelerate into the PHEV segment.
About Lotus Technology NASDAQ: LOT
Lotus Technology Inc engages in the design, development, and sale of battery electric lifestyle vehicles worldwide. It also distributes sports cars. The company sells its products under the Lotus brand. Lotus Technology Inc is based in Shanghai, China.
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