Future of Lotus

[KusaKusa]

Really interesting that Lotus Technology managed to secure funding at the same $5.5ish billion valuation that they were looking for at the beginning of this year.  Market conditions with loans and sentiment around EV companies were significantly different back then, so keeping the same valuation may be a good sign of confidence in Lotus' business plan, products, and/or current performance.

[Bibs]

https://www.thelotusforums.com/latest-news/lotus-cars-news/lotus-wins-brand-of-the-year-in-carwow-awards-2024/

[Bazza 907]

Was passing the Lotus showroom in Central London today so went in to have a look at the new Emeya.

Although I've never been a fan of electric cars, it really does look fantastic and, having spent some time sat inside it, I'd say it's a truly amazing bit of kit.

Mightily impressive. Well done Lotus.

  

[exeterjeep]

On 25/11/2023 at 12:47, exeterjeep said:

They used to be listed but when sales got so low they removed them, perhaps we should all write to SMMT suggesting that they be re-listed. SMMT do provide figures I get the results from AM ONLINE usually a day later.

https://www.am-online.com/data/manufacturer-insight have just released the Nov UK figures.

Lotus  177, so ytd  1428.

meanwhile McLaren reg'd just 4.   Their ytd now being  184.

 

 

[Bibs]

UK being 15% traditionally makes around 10k cars for the year! 

[KusaKusa]

Difficult news for Lotus and Geely as a whole in this macro economic environment. Got an article from Bloomberg's Hyperdrive (EV focused) newsletter about their finances and loans, most relevant to Lotus in the latter half:

 

Chinese billionaire Li Shufu’s attempt to create a global automotive empire to rival Volkswagen has hit a road block, as equity markets sour on electric-vehicle companies amid worries about a price sapping oversupply and rising trade tensions between China and the West.

Polestar and Lotus, two electric brands nurtured by Li, have turned to riskier funding to pay for their rapid international expansion, while Li’s Zhejiang Geely Holding Group has high borrowings and appears to carefully guard its own capital.

“All of Geely’s listed investments — and brands that may list in future — have met or exceeded the milestone product launch, production, and sales targets within their electrification strategies,” Geely said in an emailed statement in response to questions. “We have strong balance sheets in our business units and solid liquidity. We don’t believe that short term share price volatility is reflective of the portfolio’s underlying growth potential or business prospects.”

Geely has emerged from obscurity over the past decade to piece together an astonishingly diverse stable of automotive interests: It comprises western brands such as Volvo Car, Smart and London EV Company (the maker of London’s iconic black taxis), as well as EV companies it created from scratch. The most striking of these is Zeekr, a fast-growing Chinese premium brand that’s targeting a share listing in New York next year. Li also owns minority stakes in Mercedes-Benz and Aston Martin, while Geely Holding has a combustion-engine joint venture with Renault and a stake in truck manufacturer Volvo AB.

The company’s various subsidiaries together sold more than 2.3 million vehicles in 2022. Some of them share factories, purchasing and vehicle servicing to reduce costs, but several have low margins or lose money because they lack scale.

Most have also set very ambitious international sales targets requiring heavy investment: Volvo anticipates all of its sales will be electric by 2030, and it plans to stop manufacturing diesels early next year. “Unlike some other OEMS pushing the brake pedal on EV investments, we do not expect Volvo to delay anything,” UBS analysts wrote last week.

When Volvo and its electric offshoot Polestar listed shares in 2021 and 2022, together they raised around $3.5 billion. At their peaks, each was valued at close to $30 billion. Credit-rating companies were hopeful similar transactions would help Geely Holding cut debt. But while Geely still plans to list Zeekr and Lotus Tech, the Chinese high-end EV offshoot of the UK racing marque, the market has become less accepting of cash-consuming ventures.

Volvo and Polestar’s shares have slumped to record lows in recent weeks, while those of Hong Kong-listed Geely Automobile are near a seven-year low, as rising EV sales and growing competition weigh on margins. Li’s personal net worth has shrunk to around $9.3 billion from a peak of $32.6 billion in 2021, according to the Bloomberg Billionaires Index.

Zeekr has delayed its US initial public offering until February following reports of a mismatch between Geely’s price expectations and those of institutional investors. Zeekr privately raised $750 million last February at a $13 billion valuation; though its gross margins are rapidly improving, it still lost $1.6 billion in the 18 months through June 30.

Polestar’s ride has been even bumpier. Reflecting its rapid international expansion and the costs of launching several new models, the Swedish brand has burned around $3.5 billion of cash since the start of 2022 – an astonishing sum considering it outsources manufacturing to its owners (as Zeekr and Lotus also do). Volvo owns just under half of Polestar, while a Li-owned entity controls almost 40%. A Geely affiliate owns 79% of Volvo.

Having cut jobs earlier this year, lowered production targets and adjusted manufacturing plans to avoid US import tariffs on Chinese-made autos, Polestar said last month it needs $1.3 billion in external equity or debt funding to reach cash flow breakeven by 2025. This figure doesn’t include a combined $450 million in convertible loans recently pledged by Volvo and a Geely Holding affiliate.

Unusually for a loss-making startup, Polestar has already amassed $3 billion of total borrowings, which includes almost $2 billion of short-term loans mostly provided by Chinese banks.

The firm recently included a new risk factor in its accounts, noting that were it unable to renew this Chinese funding over the next couple of years its cash flow would be impaired. Any inability to raise external financing would leave it reliant on Chinese loans for longer, it added.

Polestar’s cash woes have also hurt investor sentiment towards co-owner Volvo, which has said it would consider swapping some of the €1 billion ($1.1 billion) it has lent to Polestar for equity, providing this didn’t increase its ownership percentage. Volvo shares came under further pressure last month when Geely sold a $350 million stake, with the proceeds earmarked to support business development within the group.

Meanwhile, Lotus projects a cash outflow of more than $1 billion in 2023, according to this prospectus, and has cut revenue targets twice this year due to shipping delays and the possibility of higher tariffs following the European Union’s Chinese EV subsidy investigation. With SPAC deals often delivering lower proceeds than expected due to high shareholder redemptions, Lotus announced $750 million of new financing last month, with one-third of the total provided by a Geely affiliate and Lotus co-owner Etika Automotive.

The remainder is set to be supplied by Meritz Securities, and the South Korean firm attached some eye-catching terms. According to the prospectus, Meritz can sell its $500 million equity stake back to Lotus in certain circumstances, including on the three-year anniversary of its investment. If that happened, Meritz would be guaranteed a 12.5% internal rate of return. If Lotus’s shares lose value in the meantime, which isn’t uncommon following SPAC listings, Lotus may be required to post additional cash collateral.

Lotus “may be required to use a substantial portion of its cash” to provide security or to purchase the Meritz shares were it to exercise its put option, which in turn would reduce the funds available to fund its operations, the prospectus notes.

Lotus told me the investment was structured this way “to protect the commercial interests of both parties, in light of the exceptionally sizable investment under current market conditions.” These “robust” funding commitments and a separate $120 million investment announced earlier this year demonstrate confidence in its performance and potential, and Lotus is well capitalized to fund the business, it added.

Geely’s talent for spotting hidden value and nurturing brands is unquestionable. Its rapid expansion, however, is meeting financial resistance in the capital markets. Vulnerabilities at the subsidiary level increase the risk of a car crash for the parent, while investors may need to fasten their seatbelts.

[C8RKH]

Probably covered elsewhere but this story is from today.

https://www.autoevolution.com/news/lotus-emira-hit-with-three-recalls-all-three-are-safety-related-226428.html

[EGTE]

I've recently been wondering what they will do at Hethel once the Emira line ends. Emeya and Eletre are built entirely in China, aren't they? So they may not need Hethel after Emira?  In that case, C8RKH's slightly apocryphal last sentence may turn out to be true.....which would be very sad indeed.

[DarrylV8]

3 hours ago, EGTE said:

I've recently been wondering what they will do at Hethel once the Emira line ends. Emeya and Eletre are built entirely in China, aren't they? So they may not need Hethel after Emira?  In that case, C8RKH's slightly apocryphal last sentence may turn out to be true.....which would be very sad indeed.

Believe Type 135 EV Sports car is too be built at Hethel when production of Emira comes to an end.

[EGTE]

That's good news, thanks Darryl.

[exeterjeep]

7 hours ago, DarrylV8 said:

Believe Type 135 EV Sports car is too be built at Hethel when production of Emira comes to an end.

Lotus submitted planning permission for a (another) new factory to the west of the existing site, this had been posted on another thread. Includes new roads/access to Potash Lane.

[DarrylV8]

Assume the new access/roads is for the delivery of batteries 

[exeterjeep]

this is a link to the article in their local newspaper, don't know if any permission has been granted..

https://www.edp24.co.uk/news/23683375.lotus-planning-expansion-hethel-site-south-norfolk/

[EGTE]

Good to hear, thanks.

[exeterjeep]

Looks as if HR Owen Hatfield is a new Lotus dealer, it is on the Lotus dealer map  now, but not on HR Owen site yet?

LOTUS HATFIELD

LOTUS CENTRE

Hatfield Business Park, Mosquito Way, Hatfield, AL10 9WN

SALES & SERVICE01707 524099

 

[ChrisJ]

ooo ..... 4 miles away, I might have to visit them

[exeterjeep]

14 minutes ago, ChrisJ said:

ooo ..... 4 miles away, I might have to visit them

May have to give them a while to actually get their showroom/workshop up and running. Seems strange to have HR Owen back in the Lotus network. Their service dept near White City only left Lotus a couple of years ago. But can't imagine that at that time they had many Lotus customers. Think that was the last residue of London Lotus Centre.

[ChrisJ]

@exeterjeep - wasn't doing anything this evening, so went for a drive down there. Showroom is present with a number of Lotus cars already there.

You can't see it on Google Maps yet as it is all a brand new building - It's a whole prestigious cars area with Lamborghini, Maserati, Ferrari, Bugatti (and others) in the same complex that I could see. There's also McLaren, Aston Martin, LR/Jag across the road with Porsche just down the road.

 

[Bibs]

Website needs a little work! 

https://www.hrowen.co.uk/lotus/

[jep]

In my experience, HR Owen are brand snobs and were truly awful with Lotus customers. This was 24 years ago but I'll never give them my dosh again.

Justin 

[C8RKH]

Lotus is now firmly a "wannabe" snob brand @jep in terms of where, and how, it is positioning itself. So maybe a good "match" going forwards for the two of them.

[ChrisJ]

2 hours ago, Bibs said:

Website needs a little work! 

Ha ha ... more than a little

[EGTE]

5 hours ago, C8RKH said:

Lotus is now firmly a "wannabe" snob brand @jep in terms of where, and how, it is positioning itself. So maybe a good "match" going forwards for the two of them.

Given what I just got charged for a B Service, you are not wrong! I honestly would have been shocked if a Porsche dealer had charged what they did.  Won't be going back.

[mdavies]

9 hours ago, ChrisJ said:

Ha ha ... more than a little

Possibly from a slightly cynical point of view, 

The initial words in latin seem fair enough to me as an introductory sentence about the current Lotus world. They ponder the organisation, the cars and the owners, past present and future. Google thought so too – although it gave up after that. 

“When the corporal collapses from the pain of the vestibule, or we live without a complete hatred of the mourners.”

🙁

[Rambo]

https://www.eveningnews24.co.uk/news/24029628.lotus-group-makes-30-norfolk-staff-redundant-hethel/