Lotus UK has been told it needs to prepare for the end of production at Hethel as the Geely-owned company pivots production towards the US.
The order to stop has come from Lotus management in China, a source told Autocar.
Lotus didn’t provide a comment, but did confirm that production of the Emira sports car, the plant’s chief model, has been paused since mid-May as it managed the fallout from the increase in tariffs in its key market of the US.
Lotus wants instead to build cars in the US., eradicating tariff barriers. “We believe that localization is a feasible plan,” Lotus CEO Feng Qingfeng said on his company’s first quarter earnings call June 25. “We are trying to leverage our US strategy to catch up the losses due to the tariff hike.”
Feng said that the company had an “in-depth discussion with our strategic partners” to build in the US, without mentioning names. The strongest possibility is that Lotus moves some production, including possibly the Emira to Volvo’s under-utilised plant in South Carolina. Volvo is also owned by Geely.
Lotus has scrambled to reduce costs amid persistent losses. The company in April laid off 270 workers at Hethel and is Autocar understands its Clerkenwell headquarters is set to close having only been opened a few months ago at huge expense. The brand’s flagship store on Park Lane has been transferred to dealer group HR Owen, understood to also be part of a cost cutting move.
Lotus sales fell 42% in the first quarter of the year, marking the first significant decline since Geely rolled out a new range of electric ‘lifestyle’ vehicles including the Eletre SUV and Emeya sedan.
Geely bought the brand in 2017 from Malaysia’s DRB-Hitcom, which also owns Proton, but has yet to see a return on the its £2 billion investment. Lotus posted a net loss of $183 million the first quarter while debts increased to $3.3 billion.
The company has been hit by muted demand for cars at the top end of the electric segment. “In recent years, premium brand BEV penetration does not meet our expectation,” Feng said on the call.
The US was to be a big market for the new electric cars but the country’s imposition of 100% tariffs on China-built EVs forced Lotus to stop selling the Eletre there. Demand has also fallen in Europe and China, with deliveries of the Eletre and Emeya down 31% to 719 in the first three months.
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I thought it was madness to give up on the Elise market, and focus on a far more expensive car. But, lets face it, The UK is a terrible place to build any sports cars these days. Our, and Europes focus on CO2 and EVs means the market is very small, and only going to get smaller. America does seem a better place to build them in the short term.
Longer term, who knows. I think for Lotus to even pretend to remain British, they still have to be designed and developed here. But they are not British any more are they. They are Chinese, and they have no understanding of the Lotus brand as we can see from the electric cars they make. Will even the Americans want to buy Chinese sports cars with an old British badge on them made in America? Given how much the Emira is, surely the Americans will just pop to the local Chevy dealer and buy another Vette.