Lotus to Close UK Plant and Shift Production to US

Lotus UK has been informed to prepare for the end of production at Hethel as the company shifts its focus to the US under the ownership of Geely.

The directive to halt production reportedly came from Lotus management in China, as per a source cited by Autocar.

While Lotus did not offer a formal statement, it did acknowledge that production of the Emira sports car, the main model at the plant, has been on hold since mid-May due to the impact of increased tariffs in the US, a key market for the company.

Lotus aims to manufacture cars in the US to eliminate tariff barriers. Lotus CEO Feng Qingfeng mentioned during the company's first quarter earnings call on June 25 that they view localization as a viable strategy to offset losses resulting from the tariff increase.

Feng stated that they have had detailed discussions with strategic partners about US production, with speculation pointing towards the possibility of moving some production, potentially including the Emira, to Volvo's underutilized plant in South Carolina, given that Volvo is also under the Geely umbrella.

Struggling with ongoing losses, Lotus has been taking steps to cut costs. In April, the company laid off 270 employees at Hethel and is reportedly planning to close its Clerkenwell headquarters, which was recently opened at significant expense. Additionally, the brand's flagship store on Park Lane has been handed over to dealer group HR Owen as part of a cost-saving initiative.

Lotus experienced a 42% drop in sales in the first quarter of the year, marking a notable decline since Geely introduced a new range of electric vehicles, including the Eletre SUV and Emeya sedan.

Geely acquired Lotus from Malaysia's DRB-Hitcom in 2017 but has yet to see a return on its £2 billion investment. In the first quarter, Lotus reported a net loss of $183 million, with debts rising to $3.3 billion.

The company has been impacted by weak demand for high-end electric vehicles. Feng noted during the call that the penetration of premium brand battery electric vehicles has not met their expectations in recent years.

The US market was expected to be significant for the new electric cars, but the imposition of 100% tariffs on China-built EVs forced Lotus to halt sales of the Eletre in the country. Demand has also decreased in Europe and China, with deliveries of the Eletre and Emeya dropping by 31% to 719 units in the first three months.