The heart-stop moment came on early Friday morning. A source with impeccable connections to Lotus UK told Autocar that the order had come from China to prepare its historic manufacturing facility in Hethel for closure.
A second source backed up that bombshell. Lotus was investigating moving sports car production to the US. Separately, the Financial Times discovered from a different source that Hethel was indeed on the chopping block, threatening 1300 jobs.
On Saturday, however, Lotus put out a statement that “there are no plans to close the factory”, pointing out that UK was “the heart of the Lotus brand”. On Sunday, secretary of state for business and trade Jonathan Reynolds met with Lotus to receive assurances that the plant would be safe.
Relief that Lotus wouldn’t closing its facility after almost 70 years was spoilt by a feeling of unease. What the hell just happened? Was Hethel really under threat?
Lotus was certainly keen to move production to the US, as confirmed by CEO Feng Qingfeng on the company’s earnings call just two days earlier.
The statement from Lotus, while making it clear there was to be no shutdown, also left some room to manoeuvre. “We are actively exploring strategic options to enhance efficiency and ensure global competitiveness in the evolving market,” it stated.
The phrase ‘evolving market’ is mild way of saying that Lotus has been hit hard by the slower-than-expected demand for luxury electric cars. Since Geely bought a majority stake in Lotus in 2017, the Chinese giant has bet heavily that it could leverage the brand’s storied past to create a sporting luxury brand – a battery-propelled Porsche equivalent.
Over $2 billion of investment later - including a new factory in Wuhan, China, with a capacity of 150,000 and a £100 million makeover of Hethel – Lotus has yet to see a return on that investment. According to its stock market prospectus, published as recently as 2023, this was the year the company was scheduled to make its first profit. Instead, the company posted a net loss of $183m for the first quarter while debts increased to $3.3bn.
“They took a big punt on premium luxury electric cars and no one’s buying them,” said one former executive. Lotus wasn’t alone in thinking that electric was going to be the fuel of the future. The rise of Tesla and particularly the way electric fever juiced its stock price persuaded many seasoned executives that electric was the way forward.
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