Lotus, majority-owned by China’s Geely, has announced a notable revision to its 2024 delivery forecast by slashing its annual delivery target by more than half due to new tariffs on Chinese electric vehicles (EVs) and weakening demand in key markets.

According to Lotus, the company now projects to deliver just 12,000 units this year, a dramatic reduction from its previous target of 26,000. This adjustment comes in the wake of plans by the United States (U.S.) and the European Union (EU) to impose hefty tariffs on Chinese EVs. 

Despite Lotus previously reported strong revenue of $679 million for 2023 financial results, the latest announcement has had an immediate impact on investor confidence, with Lotus shares falling as much as 4.3%. Since its listing in February, the company has lost almost half of its market value, a trend that reflects broader challenges facing Chinese EV makers expanding into Western markets.

Despite these setbacks, Lotus reported some positive figures in its Q2 earnings. Deliveries for the three months ended June 30 stood at 2,679 units, up from 2,194 units in Q1. Revenue for Q2 reached $225 million, more than doubling the $111 million reported a year earlier. However, the company’s net loss widened to $202 million, up from $193 million in the same period last year, largely due to increased selling and marketing expenses as the company pursued its expansion plans.

Qingfeng Feng, Group Lotus CEO, addressed these challenges during the company’s Q2 earnings call. He emphasized that the decision by the U.S. to impose 100% import tariffs on Chinese EVs has “dramatically affected our forecast.” 

In addition, Feng also noted a 50% drop in the overall Chinese luxury car market, adding another layer of complexity to Lotus’ business environment.

In response to these headwinds, Lotus is implementing a series of strategic adjustments. The company plans to “relaunch or reposition [its] product in Europe” toward the end of the year, potentially introducing different variants to better suit the market. Feng stressed the importance of maintaining “price discipline to protect our brand equity, value, and desirability,” indicating that the company will not resort to aggressive discounting to boost sales.

As Lotus is recalibrating its product strategy to explore ways for faster and easier global market entry, the company is also moving forward with plans to launch a new mid-size electric SUV in 2025 with sales projected to start in 2026 and details of this new model are set to be revealed at the upcoming Guangzhou motor show in November.

With the situation at Lotus is indicative of the hurdles facing Chinese EV makers as they attempt to expand globally, the company will need to demonstrate agility and strategic foresight to navigate these turbulent waters as the coming months will be crucial in determining whether it can adjust its course and regain investor confidence in an increasingly competitive EV market.

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