Operator:

Thank you for standing by, and welcome to the Lotus Technology, Inc. Fourth Quarter and Full Year 2024 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Ms. Demi Zhang, Head of IR. Please go ahead. Demi Zhang: Thank you, Darcy. Good morning, good afternoon and good evening, everyone. Thank you for joining Lotus Tech's Fourth Quarter and Full Year 2024 Earnings Call. This is Demi Zhang, the Head of IR, at Lotus Tech. I'm very honored to introduce company management with us today, CEO, Qingfeng; and CFO, Daxue Wang. On today's call, we'll start with prepared remarks from CFO and CEO first and then kick off the Q&A session. Before we continue, please be reminded that today's discussion will contain forward-looking statements pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 and forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the view expressed today. The further information regarding risks and uncertainties is included in relevant filings of Lotus Tech with the U.S. Securities and Exchange Commission. The company undertakes no obligation to update any forward-looking statements, except as required under applicable law. Please also note that our earnings press release and this conference call will include disclosure of nonupdated GAAP financial information as well as unaudited non-GAAP financial measures. Please refer to our press release, which contains a reconciliation of unaudited non-GAAP measures to comparable GAAP measures, which you can find at ir.group/lotus.com. With that, I'd like to turn the call over to our CFO, Mr. Wang, please. Daxue Wang: Thank you. Hello distinguished shareholders, analysts and members of the press. Thank you very much for joining our Q4 and full year 2024 Earnings release. My name is Daxue Wang, Chief Financial Officer of Lotus. I would like to take this opportunity to brief you the financial results of the company. In 2024, the company delivered over 12,000 vehicles, reflecting a year on increase of over 70% for the fourth quarter, over 4,500 vehicles were delivered, representing a 20% year-on-year increase. We consider this as a remarkable growth considering the global trade uncertainties and economic slowdown. As for the revenue, although the fourth quarter results was narrowed by 12% year-on-year to USD 272 million. The company gained increase of 36% year-on-year increase to USD 924 million over the full year. Another achievement that we want to highlight is we have achieved a reduction in operation expenses for 5 quarters in the row, the rigid execution of enhanced efficiency enhancement plans. Now I would like to further break down our sales by category and by region. In terms of the lifestyle vehicles increased by 55% year-on-year and accounted for 57% of the total deliveries as well. By region, Europe, the home of Lotus brand continued to expand with a year-on-year increase of some 180% and contributed nearly 40% of the total deliveries. China and the second largest market for Lotus contributed 1/4 of the total deliveries. North America, mainly the United States, surged by [indiscernible] in 2024 making up 21% of the company's total deliveries. And the rest of the world regions represented 15% of the total, with nearly 90% year-on-year growth. For your attention in the fourth quarter we started to deliver Emeya in Malaysia, Thailand, Singapore, UAE and Philippines. For the key financial indicators, deliveries and revenues are being just reported, I may not repeat here. The cost of revenues increased to USD 895 million as to USD 301 million for the full year and for the fourth quarter, respectively. As a result, the gross profit margin was lower to 3% for the full year and back to 11% for the fourth quarter. We reported an operating loss of USD 786 million for the year and $189 million for the fourth quarter. Net loss was accrued to around $1,107 million for the full year and $441 million for the fourth quarter. For your information, adjusted net loss adjusted under the non-GAAP measures were not much to differ. Then I'll first stop here and turn over the speaker to Mr. Feng. Feng Qingfeng: [Interpreted] Hello, everyone. I'm CEO of Lotus Tech Feng Qingfeng. Allow me to share our key achievements in the year 2024. Our performance overall is better than the broader luxury market. We have ranked the top among British luxury car brands with over 12,000 vehicles delivered in 2024, a 74% better compared with our performance in 2023. Currently, we have 4 models under delivery. We have 1 SUV, 1 Sedan or rather GT and 2 Sportscar, including Emira and also Evija. Last year, we keep exploring our international footprint. We have entered into more than 10 countries in GCC region, Asia and Oceania. In addition to that, we have also been keeping cost reduction and also efficiency improvement, and we've been achieving operating expense reduction for 5 consecutive quarters. Besides we have also launched our Theory 1 concept car. This is a revolutionary concept car made with sustainable materials to redefine luxury and we have gained wide recognition from our press friends. This particular vehicle, it has defined our direction for our future models, particularly on its design language and also it's sustainable principles. As for our progress on ESG, we were honored as highly commended at Reuters Sustainability Awards 2024, leading the EV industry within Reuters Vision 2045 campaign. Lotus was the winner of the 2024 EUCCC Sustainable Business Award and the Green Apple Award for outstanding environmental practices. Our sustainable supply management case was also included in Shanghai Climate Week 2024 Climate Tech in focus report, and this report was also released at November 29. As for our recent development in 2025, we have already delivered more than 12,000 vehicles in the first 3 months and as for the sales at the end, we have already delivered more than 2000. In the past, the Lotus in China was called the English pronunciation of Lotus, and we have to use NYO as part of our logo. But in January 2025, we have successfully reclaimed the proprietary rights of Lotus iconic logo, Lotus word mark and the Chinese character of Lotus Lianhua in China, ensuring consistency in terms of its trademark across the world. In addition to that, we have also made a model facelift for our Eletre and Emeya. Specifically in February, we have refreshed the lineup for those 2 models with upgraded configuration and competitive pricing. In China, the vehicle has been delivered starting from February and in quarter 2, the delivery will also commence in EU and the rest of the world. Besides, we have also launched the mapless urban NOA, Navigation On Autopilot in 16 cities across China in February this year. The system can effortlessly achieve lane-changing seamless transition between highways and city roads, U-turns at intersections, intelligent lane selection and smart obstacle avoidance. Starting in February, we have also started our OTA to push this function to our end customers. This system can make our vehicle to be able to deliver door-to-door intelligent driving. Starting from quarter 2, this function will be available in more than 100 cities in China through OTA. In March this year, Lotus intelligent driving arm Lotus robotics has also established a strategic partnership with CaoCao Mobility to launch an innovative intelligent mobility platform for robotaxi. We have also started the pilot operation in the city of Hangzhou and the City of Suzhou. In addition to that, Lotus Technologies natural capital assessment projects was also included in World Economic Forum report, which demonstrated our ambition and also our progress in sustainable development, particularly on more luxury vehicles. In April 14, 2025, we have received the exercise notice from Geely requiring Lotus Tech to purchase 51% of the equity interest in Lotus U.K. According to the Put Option Agreement dated January 31, 2023, between the parties. If we can exercise this Put Option, we will be able to operate on 2 factories have a factory in the U.K. and a factory from China. Those 2 factories can cover 4 regions: Middle East, APAC, Europe, China and North America. As for the exercise of the Put Option from Geely, Lotus expects to acquire 50% of average interest in Lotus U.K. through a noncash transaction based on pre-agreed valuation methodology. Upon completion, Lotus will gain control of Lotus U.K. and consolidate the financial results. The strategic transaction will enable the company to integrate all global business under Lotus brand. Subject to potential regulatory approvals, the acquisition is expected to be completed in 2025 this year. As our product pipeline, Evija, this is our hypercar, it has a limited offering of 130 vehicles globally. We have already started the delivery of this hypercar. And moving on to our Emira Sportscar. The U.S. market is the biggest market for Emira and this vehicle has also been available for global other markets. This year, we are going to launch a model year '26 for Emira. It will be dedicated to the U.S. market and also reach the compliance requirements for other markets. In 2027 and we are planning a major uplift for Emira. It will have a more horsepower. It will also be compliant to EU 7 emission requirements. As for our lifestyle vehicles, Eletre and Emeya, previously I briefly mentioned about this, that we have already commenced the delivery in China for model year '26 and the delivery for EU, U.K. and the rest of the world will also start in quarter 2. At the end of this year, in other words, at the end of 2025, we are planning to launch a PHEV. We would call it hybrid model. This model will start delivery first in China in quarter 1 next year. In 2027, we are also planning another new model and by adding this new model together, we would be able to deliver our vision of Vision 80 strategy. In other words, we will have 6 models in total. And that's all I'd like to share with you. Thank you. Demi Zhang: Thank you, CEO and CFO. Darcy, we are ready for Q&A, please. Operator: Your first question comes from Kevin Collery from Tier 1 Systems. Unknown Shareholder: I'm calling as a Lotus investor as someone who opened an exotic car dealership here in California about 11 years ago. And most of all, as a car enthusiast and basically, really, my question is, is there any plan -- it seems like you have a really amazing opportunity with the Emira to create something that would be highly in demand here in the U.S. market, which would be something that's lighter weight than currently exist right now in Emira, may be adding carbon ceramic brakes, carbon bucket seats, some other things to remove a couple of hundred pounds and also increasing the horsepower and red line on the V6, which is an amazing engine, it sounds great. If you look at Porsche, they really have kind of created the recipe that everyone else, I think, should follow. If you look at what the GT3s and the GT3 RS is sell for, I mean, they're going for 10,000 over MSRP right now, they're almost impossible to get. I'd be curious to know, do you have any plans of creating just really like a hard core, maybe an Emira R with a high revving V6, manual transmission, lightweight. I think that would do amazingly well here in the U.S. market. Feng Qingfeng: [Interpreted] Thank you for your question. I think it's a brilliant suggestion. And in fact, U.S. is the largest market of Emira, almost 50% Emira sales are all coming from the U.S. and particularly our V6 model are very much preferred by our U.S. consumers. Well, we are very clear that our U.S. consumers sort of prefer engine or model with a higher horsepower and high RPM. As a matter of fact, we have another model available in the U.S. market, the 2.0 turbo model. It has also rather relatively high horsepower. At the very beginning, we were quite concerned about our U.S. consumers that they may only prefer the V6 model instead of the 2.0 turbo model. However, after our consumers testing drives the 2.0 turbo model with also 400-horsepower, our consumers like it, and particularly with its power consists of 8-DCT transmission and a very faster response. As for the 6, we -- to be honest, we do not have a plan to further increase its power because this engine will not be compliant for EU 7 emission. However, we are investigating a new power system, which is V8. It will have a bigger horsepower, and we are currently investigating the feasibility of the V8. And actually, this year, in Europe, we have launched some limited addition with less weight like the suggestion that you mentioned, we put more carbon fiber series on it. And we will consider to see if we are going to launch similar models in the U.S. market. Thank you for your passion for Lotus and also thank you for your great suggestion. Operator: Your next question comes from Laura Lee from Deutsche Bank. Laura Lee: So my first question is about the ADAS revenue. So what's it like contribution over the last year? And any update on the guidance. Any new design win you're working on. Yes, that's my first question. Demi Zhang: Thank you, Laura. I will invite our CFO to answer. Our first question is on the revenue guidance. Daxue Wang: So you mean for the 2025, right? Laura Lee: Yes. Daxue Wang: Okay. So this year like, we have a detailed plan, it's going to be like we have improvements compared to the 2024. Let's say like -- we are waiting for the further approval from the Board of Directors. Demi Zhang: And Laura's second question, I remember the question on the revenue on the robotics for next year. Daxue Wang: Okay. So for the robotics, like we achieved like pretty much improvement compared to the 1 year before. And again, not only the internally, we get revenue from the Lotus, we also gained some customers from the outside of the company and also outside from the Geely group. So like overall, it achieved like USD 22 million from the customers outside the Lotus. So that's something like, I mean, like our gross profit margin. I think we have a pretty high margin compared to the sales of goods. I mean, we are going to be able to keep this number in this year. So that's -- I think that basically the revenues from robotics side. Laura Lee: My second question is around like the margin trajectory. As you mentioned for this year and '26, are there any like headwind or tailwind on a year-on-year basis, we should consider? And also thinking about the tariff situation? Are there any like changes on production arrangements that you're considering? Demi Zhang: Yes. Thank you, Laura. Her first question is on the margin trajectory for this year and the next year? And also considering the tariff situation, is there any changes? Daxue Wang: So I think the margin is going to be much improved this year compared to last year. Last year, first, there is the trade uncertainties. And also like we have the stock -- reflected the stock clearing plan which caused our profit margin to be lower compared to the year before. But this year, I think firstly, I mean where the stock plan is going to be much over and we no longer have this stock clearing requirements. Meanwhile, like we have a much better products, like cost structure. So that means like the gross profit margin is going much better than the 2024. So that's my expectation for the year 2025. Demi Zhang: Laura, excuse me, do you mind repeat your last question on the tariff? Sorry, your voice was very far away. Laura Lee: Yes. So the second part is around like the impact of tariffs and any like mitigation you're considering like changes on production arrangement or the sort of solution? Feng Qingfeng: [Interpreted] Actually, we have been affected by the U.S. unrelatively high tariffs, particularly for our lifestyle vehicles, which is produced in China. And for lifestyle vehicle, we have already stopped its export into the U.S. market. However, our sportscar, which is produced in the U.K. has not been affected yet. We are still investigating the market, and also we are still doing analysis. Operator: [Operator Instructions] Your next question comes from Yang from MSIM China. Unknown Analyst: I have 2 questions actually. First 1 is what are the contributing factors behind the significant decline in gross profit in fourth quarter of '24. How much did the intelligent driving and the bespoke service contribute to the service revenue and the gross profit in this fourth quarter? Demi Zhang: I invite CFO, Daxue Wang. Daxue Wang: Yes. So basically, the fourth quarter performance, as you tell we have some decline is because clearly the stock. And meanwhile, like -- because of the uncertainty from the tariffs. Meanwhile, for the intelligent driving business, there's accounting rules exchange change because of the -- we changed the bookings policy from the cash basis to the accrual basis in the fourth quarter, so which resulted in some adjustment -- accounting adjustment in the figures. So you can tell from the -- for the first quarter -- fourth quarter of the sales the revenues from the services, you can see the change. So basically, about starting from this year, we already under the new accounting policies. The gross margin is going to be recovered. And meanwhile, the -- particularly in the service sector, we are going to align the intelligent driving business with the industry benchmarks. Feng Qingfeng: [Interpreted] And also, I'd like to comment that in 2025, our gross margin is going to be basically improved due to our launch of model year '26. As I previously elaborated, model year '26 will be launched in Europe, including EU and the U.K. in quarter 2. And those are 2 markets actually accounted for more than 40% of our total sales. So by launching model year '26, it can help us to improve our gross margin. Unknown Analyst: Okay. I have a second question is, what is the revenue and profit margin of the intelligent driving business in the past year 2024? And any guidance for this following year 2025 and midterm revenue and profit margin for vehicles and all the comprehensive service, respectively, what is the plan to improve the margin, yes. That's my final question. Daxue Wang: Yes. The benchmark margin for the intelligent driving business is about like 30%. So it's in line with the industry standards. And so starting from this year, we are going to not only to improve the margin also we are going to like get more clients, more business from the market. So I think they are going to further lower the cost, thereby increasing the profit margin. Operator: Your next question comes from Tom Liu from Capital Sunrise. Tom Liu: The first one is, what's the cash burn right now? And how long is the runway? Is there any significant financing we can expect in the next 6 months? Daxue Wang: Yes. As you can tell from like our financial performance, we do have the gap in terms of the cash. And also we are making the cash gap in the field through the operations, through the investment plus through the financing. And we have been closely contacting the investors in the market. So please take a close look at our announcement and also the company release. Thank you so much. Demi Zhang: Tom, You have another question. Tom Liu: Yes. My second question is about the management capabilities. So we've noticed the recent management shifts and would you mind to share the rationale behind? And what makes the current management team the right one to turn around a luxury company? Feng Qingfeng: [Interpreted] As for recent management change, we do have a welcome to a new CFO, Wang Daxue. He had a rich experience in finance and also in capital markets. In addition to that he also had a great performance in Geely. And another thing I'd like to comment is about the change of the head of sales in China. We have introduced a new China sales President, Tim [indiscernible]. He had also rich experience in luxury products, particularly with Volvo during his time with Volvo, he helped the Volvo sales volume increased from 80,000 to 90,000 to more than 180,000 to 190,000 a significant jump. And overall, I just want to say that for our entire management team, we are -- we have a seasoned and also rich experience when it comes to luxury brand management. As well as this now [indiscernible]. She previously had a really rich experience with [indiscernible] and also Lincoln. And now she is responsible for relative coordination for sales operation and brand and marketing collaboration covering the regions such as the EU, U.S. and APAC. The ultimate target is to ensure [indiscernible] facility. As for our Chief Brand Officer or Chief Creative Officer, Ben Payne, still remains at his position. And he created a lot of brilliant content for us and also the sensational concept car if you rewind that I previously mentioned is also created by him. As for our Head of South in the U.S., he was the COO with Maserati. So he can bring us a lot of great experiences that he previously gained. Operator: There are no further questions at this time. I'll now hand back to Ms. Zhang for closing remarks. Demi Zhang: Darcy, do you want to remind everybody how to raise their questions, if there is any more. Operator: [Operator Instructions] We have a question from George Tang from Alison Capital. George Tang: I have 3 quick questions for management. First question is, can management kindly give a high-level guidance on how the Put Option will impact the company's financials, such as the balance sheet, cash flow and P&L. It appears there's pretty high debt asset ratio of over, I believe 130% by end of 2024. How will the acquisition change that number? Demi Zhang: Thank you, George. I will first invite CFO to give you some color on the questions. Daxue Wang: So regarding the execution of the production, we still do the due diligence. I'm talking with the dialogue with a lot of U.K. So I think the -- we are going to release the results in onetime if its done. And for the [indiscernible] you just mentioned, it's going to be a noncash deal. So it's not going to bring the cash burden to the company. And overall, I think the your question, we can wait until we finish the investigation, and then we got the deal done. So please take a close look at our further notice. Thank you very much. George Tang: Perfect. And I have another question, perhaps it has been burning on the back of many people's minds, but I was wondering what is Lotus' U.S. strategy, market strategy, given the current geopolitical tensions and tariff situation? And having said that, what do you think would be your target sales for U.S. market in this year? Demi Zhang: Thanks, George. I would like to invite the CEO, to answer your question. Feng Qingfeng: [Interpreted] Yes, in 2025, it is going to be tougher. But particularly, we are affected by our lifestyle vehicle are mainly affected by the tariff hike. As far as sportscar, we were slightly affected. So we haven't actually changed our original plan for our sportscar sales in the U.S. We expect about roughly 200 to 300 sales loss because of the tariff in the U.S. And we are also exploring our path and solutions for the U.S. market. And because the U.S. market is the biggest market luxury premium vehicle segment. In addition to that, U.S. also has a relatively high brand awareness in the U.S. market. So definitely U.S. market will be one of our priorities. In addition to that, we will also keep exploring our feasibility of exporting lifestyle vehicles to the U.S. market. And at this moment, we will not be able to disclose any details, but please feel free to stay tuned to our future announcements. The only thing that I may add is that manufacturing in the U.S. could be one of our potential solutions. Operator: [Operator Instructions] There are no further questions at this time. Demi Zhang: Yes. Thank you, Darcy. Well, given the time constraints, I think we will conclude the call very soon. Everyone, thank you very much again for joining us today. If you have any further questions, please feel operate to contact our IR team. And this concludes the call. Have a very good day, everyone, and thank you very much again. Bye. Operator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]