Lotus to End UK Production, Shift to US for Electric Vehicle Strategy
Key Insights
Lotus plans to halt production at its historic UK factory after 59 years, relocating to the US to mitigate tariff pressures and focus on hybrid and EV strategies.
The move, driven by U.S. tariffs and declining EV sales, could impact 1,300 UK jobs and leverage Geely-owned Volvo’s underutilized South Carolina plant.
Lotus reported a $183 million net loss in Q1 2025, with EV sales dropping 42%, prompting a pivot to hybrid technology for future models.
The closure of Hethel plant threatens UK’s automotive sector goals, while Lotus aims to stabilize pricing and availability in the US market.
Lotus, the iconic British automaker, is set to cease production at its historic Hethel, Norfolk factory after 59 years, with plans to shift manufacturing to the United States. This strategic pivot, driven by U.S. tariffs and a challenging electric vehicle (EV) market, could reshape Lotus’s future as it leans into hybrid technologies and cost-cutting measures, impacting 1,300 UK jobs and the brand’s legacy.
The decision to relocate stems from U.S. tariffs, which impose a 25% duty on imported vehicles and a 100% tariff on Chinese-built EVs like the Lotus Eletre SUV. These barriers have disrupted Lotus’s key U.S. market, where sales accounted for a significant portion of its 12,134 global deliveries in 2024. "We believe that localization is a feasible plan," said Lotus CEO Feng Qingfeng during the company’s first-quarter earnings call, emphasizing the need to "leverage our US strategy to catch up the losses due to the tariff hike."
A potential move to Volvo’s underutilized plant in Ridgeville, South Carolina—also owned by Lotus’s parent company, Geely—could enable tariff-free production of models like the Emira sports car. However, Lotus’s push into EVs has faced headwinds, with first-quarter sales dropping 42% and deliveries of the Eletre and Emeya sedan falling 31% to 719 units. "In recent years, premium brand BEV penetration does not meet our expectation," Feng noted, highlighting muted demand in the U.S., Europe, and China.
Financial strain is evident, with Lotus reporting a $183 million net loss and $3.3 billion in debt for the quarter, despite Geely’s $2.6 billion investment since acquiring the brand in 2017. The planned electric sports car for Hethel has been indefinitely postponed, with Lotus Europe CEO Matt Windle questioning market readiness: "Is the market ready for an electric sports car? I don’t really know the answer to that yet."
In response, Lotus is shifting focus to Hyper Hybrid plug-in hybrid electric vehicles (PHEVs), with the first hybrid Eletre set to launch in China in early 2026. This move aligns with industry trends favoring hybrids as a bridge between internal combustion engines (ICE) and full EVs, especially in markets like the U.S., where combustion engines remain viable.
Closing Hethel would deal a blow to the UK’s automotive sector, which saw production slump to 905,233 vehicles in 2024. The government’s goal of reaching 1.3 million by 2035 could be undermined, especially after Geely’s $126 million investment in Hethel’s modernized facilities. For EV enthusiasts and Lotus fans, a U.S. move could stabilize pricing and availability, but it risks diluting the brand’s British heritage. As Lotus navigates tariffs, debt, and a volatile EV market, its U.S. strategy may determine whether it can regain momentum or face further contraction.