Welcome to Lotus Technology Inc. first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. It is now my pleasure to hand you over to the Head of Investor Relations, Ms. Demi Zhang. Please go ahead, ma'am. Thank you, Amber Lane. Good morning, good afternoon, and good evening, everyone. Welcome to Lotus Tech's first quarter 2024 earnings conference call. This is Demi Zhang, the Head of IR at Lotus Tech. Joining me today is our CFO, Alexius Lee. On today's call, we will have Alexius begin with prepared remarks and conclude with a Q&A session. Before we continue, please be reminded that today's discussion will contain forward-looking statements pursuant to the Safe Harbor Provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the views expressed today. Further information regarding risks and uncertainties is included in relevant filings of Lotus Tech with the US Securities and Exchange Commission. The company undertakes no obligation to update any forward-looking statements, except as required in applicable law. Please also note that Lotus Tech's earnings press release and this conference call will include disclosure of unaudited GAAP financial information, as well as unaudited non-GAAP financial measures. Please refer to our press release, which contains a reconciliation of unaudited non-GAAP measures to comparable GAAP measures, which you can find at ir.group-lotus.com. Now, I'd like to turn the call over to our CFO, Alexius Lee. Alexius, please go ahead. Thank you, Demi. Hi, everyone. My name is Alexius Lee, and I'm the CFO of Lotus Technology, Inc. Let me go to the slide, please. Thank you. Now, this slide is a reminder that Lotus is old, with long-standing British heritage and F1 accolade. Lotus is also new, with lots of awards and milestones achieved recently. In 2024, we won the Brand of the Year award by Carwow, and also got ourselves listed on Nasdaq in late February with the ticker LOT. Next. I want to begin with our first quarter financial performance. The company delivered approximately 2,200 units of vehicles and achieved total revenue of $173 million in the quarter, of which both are record numbers in the 76 years of Lotus history. To your left, year-over-year growth by more than 700%, with vehicle delivery expanding to the Americas and many other regional markets across the world. Besides Emira sports cars and the electric SUV, they made up the bulk of the 2023 sales volume. The new Emeya, our electric GT sedan model, and the Evija began to deliver in March, which will contribute from the second quarter. In the middle, we have sales revenue also growing exponentially year-over-year, as compared to just $90 million in the first quarter last year on seasonal cycle. The company successfully launched our Chapman Bespoke services in the first quarter of 2024, providing potential customization selections to customers on their Lotus vehicles. On the right, gross profit margin was 18% in the first quarter, a step up versus the 15% achieved in 2023. The improvement is powered by asset-light model and higher-margin businesses, including accessories, options, and R&D services. Next slide, please. To your left, the chart will show you that the Eletre, which is mainly the electric SUV model, contributes approximately 50% of total volume, while the Emira sports car sales contributing the rest. This is mainly driven by strong delivery in the U.S. market, given well-established network. The chart in the middle and the right, and the one on the right, shows the vehicle delivery as compared to the retail network distribution across the world. Europe, which is inclusive of the U.K. market, remains the biggest contributor to Lotus volume and revenue, given our British heritage and legacy, and long-standing brand recognition. The U.S. is the most efficient market, contributing 31% of volume through 23% of total retail stores. China is a new market to Lotus, and took up 25% of total vehicle delivery, with about 25% of total retail stores. Next slide, please. This is a slide just to highlight that there are four models on delivery in 2024, as compared to only two in 2023. Emeya, our GT sedan, and Evija, our hyper halo car, are new additions. And this slide shows an introduction about the performance Emira, the most powerful four-cylinder Lotus sports car ever. Emira, Emira is iconic and resonates with worldwide fans of Lotus. Orders and sales momentum of this ICE sports car is powered by demand from the U.S. market. Eletre, the slide shows our award-winning Eletre, our electric SUV model, which was launched in 2022 and began delivering in 2023. Eletre has a single eyelid headlight design, and is available in various performance spec options, and a full suite of intelligent applications, such as ADAS and operating systems to suit global preferences. This is our four-door electric GT sedan model, which was launched in New York, Manhattan, in third quarter 2023, and began delivering late March this year. The Emeya model is ramping up awards and positive feedbacks, and is most known for its double eyelid headlight design versus the single eyelid Eletre. This is our Evija, the halo car, which is electric hyper sports car with 2,000 horsepower and priced at more than $2.2 million per unit. Evija made its first racetrack debut in China about two months ago by Jenson Button, a F1 world champion. This model offers great bespoke opportunity with customization for superior luxury segment, especially young generation, high-net-worth individuals. As mentioned earlier, we roll out our exclusive prestige bespoke services during the recent Beijing Auto Show to offer exclusively luxury specifications to potential Lotus car owners. Many of these designs not only integrated the Colin Chapman's charm into this design concept, are limited edition and specific, and the specs are all tailor-made. Adoption of these bespoke services will not only drive ASP, but also gross profit margin expansion. In April, the company revealed the limited edition Emeya Blossom, a luxuriously customized vehicle in the middle. You can see that in pink. This collection features rare gradient painting and 42 natural sapphires on the instrument panel, which garnered a lot of significant attention from the viewers at the Beijing Auto Show. Now, moving away from the cars, we look at what is the ecosystem. As a pioneer among traditional luxury brands to spearhead into transformation towards electrification, Lotus is also ahead in terms of establishing our charging infrastructure. More than 3,300,000 charging stations across Europe are now accessible for Lotus BEVs' drivers. The company also entered into a strategic partnership with NIO on battery charging, granting drivers access to its network of 21,000 EV chargers across China. Among them, Lotus-owned charging stations will offer fully robotic charging arms to provide a world-class experience and a seamless charging feel. We value our For The Drivers brand mission, and we put them into action. During the Lotus Day 2024, we invited VIPs to not only celebrate the new product launch in China F1 Circuit, but we also got them test drive our intelligent BEVs, to engage with them directly to capture their ideas that can potentially be accepted in our- or incepted in our next upgrades and designs. Passion of this F1 was reconnected with tens of millions through live streaming and social media, which is a good plus for the brand. Beijing Auto Show is a parade for the Lotus limited edition, including the Evija, Eletre, Type 79, the Emira Tailor Made, and the Type 66 models. The Emeya Blossom, which I shared with you just now, is also sitting in the middle, which received a high level of customer interest. A series of global auto shows, media test drives were conducted throughout the world, and Lotus also prepared for marquee events such as the Carmel-Monterey Car Week, the Goodwood Festival of Speed, and other exclusive racetrack events to continue to build the iconic brand. Now, in this slide, we really want to look at the numbers. We have two factories right now producing the Lotus vehicles, and they are both owned by Geely for long-term secured manufacturing. The asset-light arrangement means low industrial CapEx and limited depreciation and amortization for the company. Lotus has been around for a very long time, selling iconic vehicles through its global sales network of over 200 stores in prime locations. Global sales operated under the traditional wholesale retailer model that have been established for a very long time. This is very asset-light as compared to the D2C model. China is a new market to Lotus, and we operate under the direct customer D2C model. First quarter contribution from China is 25% of total volume, through 25% of total retail stores. We are definitely at the end of the CapEx cycle for establishing or building up showroom stores. Lotus Tech, the company that's listed in Nasdaq, is responsible for the global distribution of all Lotus branded vehicles, and will capture all the financial returns from the Lotus development. Now, looking at this slide, Lotus has always been an award winner. While we are previously known for our market-leading engineering services, aerodynamic designs, and material science for lightweightness, Lotus is also known for its relentless pursuit for next-generation auto mobility technologies. I would like to point to the middle row, where you can see a full display of our awards in electric charging, digital operating system, and applicable AIs. These next-generation technologies are incepted in our Lotus models. Next, please. To your right, you'll note the progressive volume expansion of the brand. In 2023, only 90% and 60% of this market will actually have access to the Emira sports car and the electric SUV. This will change very quickly, as 100% of this, of the total retail market will have access to these models in 2024, especially in the second half of this year. 50% of the markets will have access to the newly launched Emeya, which is our GT sedan. To your left, you will note the progressive plan on the number of Lotus stores that is going to be established globally. In short, for 2024, 2025, the growth of Lotus Tech will be powered by more models into more markets through more stores. Now, looking at the guidance, coming back to our 2024 outlook, you'll see that to your left, it's important to note that before we start launching our electric vehicles, an average of 1,200 units Lotus branded vehicles was sold annually between 2018 and 2022. We achieved nearly 7,000 units of sales in 2023, and we are targeting about more than 20,000 units in 2024. Out of the 2024 volume, sports car is expected to contribute 20-30% of the volume, while lifestyle BEVs will contribute the remaining 70%-80%. Product expansion to the SUV, sedan, GT crossovers open up opportunities for a much bigger pie in the luxury segment that's priced above $80,000 per unit. Based on our volume outlook, the forecasted sales revenue will be more than $2 billion, as compared to approximately $680 million in 2023. ASP is likely to stay around the same level, as mix shift towards more lifestyle BEVs and take-up rates of the accessories, and options, and customizations will boost ASPs. To your right, you'll see the gross profit margin evolution with potentially positive improvement to the range of 17%-19%, as compared to just 15% in 2023. In the first quarter, as I mentioned just now, we already delivered 18% in gross profit margin. Now, this is definitely coming from positive scale effects and identifying synergies and cost saving, coupled with executions of high-margin businesses. Next, please. Now, coming back to the financials. First column will show our first quarter financials, which is very strong, with the volume delivery and sales revenue expansion of around 700%-800% year-over-year versus 2023. The low base in first quarter 2023 was mainly attributed to only sports car sales, unlimited sports car sales and BEV sales that actually began in March 2023. Worth noting for this year, first quarter, is the $30 million of gross profit achieved in the first quarter. That translates to 18% gross profit margin. It's important to flag that UK-built sports car are lower in gross margin, given that we have higher manufacturing expenses, while the Wuhan-built BEVs are higher margin, given higher degree of automation, supply chain, and operation efficiency. As mentioned previously, BEVs contribute nearly 50% of the first quarter volume and is supportive of our GPM. Other positive factors contributing to GPMs are sales of accessories, options, and technology, R&Ds. EBITDA is -$204 million in the first quarter versus $154 million last, same time last year. Objective is to gradually trim down net loss per quarter by the end of the year as the business scale up. Management team will continue to build on the, strength of the business and improve operational excellence to support overall growth. Yeah. Now, moving on to the ESG section. Today, the company also published our annual 2023 ESG report, which outlined its achievement in building a green value chain, leading clean mobility, and upholding business integrity through the efforts in security and privacy protection, as well as community support. One of the key highlights include 100% of the suppliers that signed the code of conduct with supply chain ESG management system with blockchain technologies. Some of the recognitions and achievements in 2023 include the gold certification of LEED for the Lotus Tower in Shanghai, the National Level Green Factory Award, which is a very exclusive award, 100% renewable energy usage in selected regional offices. As the Chairman of the ESG committee, I will emphasize that sustainability is at the core of our Vision 80 strategy, and the company is committed to achieve 100% electric portfolio by 2028, carbon neutrality from the entire supply chain, and to secure top ESG rating with our stakeholders and aim for long-term sustainability for the industry and the company. As mentioned previously, we have four models of Lotus branded vehicles made available into the market this year. By 2025, all these models will be available in 100% of the retail stores. Following that, we will have a Type 134, a D-segment electric SUV, which is smaller in than the Eletre, to be launched in 2025. Following that, we will have a next model of Type 135, which is a smaller sized, sports car, which we launch in 2026. We have 6 models in our hand to support our future growth trajectory. Lotus is definitely standing on solid foundation. To your left, you'll see that Geely is a strategic shareholder and have the means to empower Lotus in global manufacturing, supply chain procurement, talent incubation, and others. The company also has a strategic partner in L Catterton, that offers brand building, consumer insights, and access to LVMH resources. The Vision 80 strategy start from 2018 till 2028, and by then, management's view is for 4% market share in the luxury segment, which is priced above $80,000 per unit. This is done through product lineup expansion from the niche sports car segment to the full range of lifestyle models, such as the SUV, the GT Sedan, and the crossovers. Revenue profile will also expand from traditional car sales, new or used options, pickup, aftermarket, to those high margin, revenue streams such as technology IP licensing, L2, L3 plus ADAS subscription, Chapman Bespoke customization, charging facility services, and potentially in-car purchases through the operating system. When done right, the company could potentially achieve more than 30% gross profit margin, based on our estimates. The growth is enormous, and we plan to deliver cash and profits to our shareholders. So business is evolving and is in line with our Vision 80 strategy. Now, without further ado, I thank everyone for staying with me today, and we appreciate your attendance today. We look forward to delivering our cars to all the drivers who have actually placed their orders, and cash to our shareholders. I'll pass it on over to Demi to host the QA session. Thank you, everyone. Thank you, Alexius. Operator, we are ready for the Q&A session. Thank you. We will now begin the question and answer session. To ask a question, please press star one one again. To withdraw your question, please press star one one again. Our first question comes from the line of Edison Yu from Deutsche Bank. Please ask your question, Edison. Hi. Thank you for taking our questions. Good morning, good evening, everyone. First off, you maintained the guidance for the full year. Obviously, that suggests a pretty big ramp-up in deliveries for the next three quarters. How should we think about the trajectory? Should we think of it as very back-end loaded in the fourth quarter? Thank you, Alexius. Thank you, Edison. Alexius? Yep. I will pass down to you. Yes. Hello, can you guys hear me? Yep. Yes. Okay. Edison- Yeah. Thank you for the question. I think, it's important to note that, from where we are standing, the company is definitely gradually moving up, stepping up the, progressively for the sales and order delivery. Now, while we are looking at only approximately 2,200 units of sales order or sales, delivery in the first quarter, we have also shipped more models and more vehicles through the network, to global distribution. So definitely we think that this is not going to be a, a fourth quarter second loaded, but rather it will be a progressively increase between, the first quarter to the fourth quarter. Yes. So, as more markets, like I mentioned just now, more markets will start to have more products, more models into them. For example, we are starting to deliver our Emira in UK, Europe. We're also starting to deliver our Eletre in the likes of Korea, Southeast Asia, and even the Middle East. We'll start to see more of this market taking up these products, especially in the second half of this year, given homologation, shipments, arrangements, and others. So we think that this is going to be definitely a gradual pickup from first quarter to the second quarter to third quarter to the fourth quarter. The best way for you to understand is probably the Emira rate, similar to 2023 pickup, yeah. Understood. Curious on the second question, on the order intake from the newer markets that you've launched in, how are we feeling about those? And I know the bespoke solution is very profitable. Do we have a sense on the take rate for that? We do not have a specific forecast for the Chapman Bespoke customization service. Definitely, we are very observing in terms of how the take rate is. Now, part of it is definitely on the customization services to individuals and tailor-made services on that. Now, part of it is also offering limited editions that probably resonates very well with the market, given that, you know, it has what they call unique prestige designs, and also limited edition on that. Now, we think that looking at where we are, if you look at the market right now, the demand from the U.S. market in terms of our sports car is beating our expectations. We're seeing orders moving up very quickly as more stores are able to get hold of the products and actually display, which of the customers engage with them, test drive, and place the orders. So we think that the entire brand's pedigree is all resonating very well with the market. And definitely, the first thing is to get the vehicles into the market and looking at option tops, and also offering selectable customization services. Yeah. So volume up first, followed by ASPM GPM expansion. Understood. On the U.S., I'm sure you've seen the headlines of the higher tariffs. How does that impact, if at all, the BEV rollout? I think you're targeting it for the second half of this year. Well, we have continued to see potential risks, we have considered them, and in the process of evaluating this impact. Now, one very important message is, we believe the U.S. will be a key market for our vehicles in the long term, and we remain very committed in delivering vehicles there. Now, while we are seeing, like I've mentioned just now, while we're seeing, the orders going up very strong, we are also seeing, even the ICE cars demand beating our expectation. Now, we are very committed to growing our global footprint, and, definitely U.S. is one of the key markets. The whole Americas is a key market, and we want to make sure that we do not have a single market risk, well-balanced market, to actually offset any potential risk. Understood. Just one last one for me. The OpEx trajectory for this year, I think last time you mentioned something around flattish year-over-year. Is that still the target, or is that still a good way to think about OpEx for? I didn't catch your question. Oh, for this year, the OpEx, the operating- Oh, yeah ... expenses, SG&A, R&D. Is it? Should we still expect about flat year-over-year? Well, like I mentioned just now, SG&A in a way of selling is definitely something that will go hand in hand with the number of sales, so there's going to be a portion of that, that goes with it. Now, the broader OpEx is going to have incremental increase, but it's definitely going to be way smaller than our volume trajectory and outlook. Great. Thank you very much. Thank you. Thank you, Edison. As a reminder, to ask a question, please press star one one on your telephone keypad. Yeah. Thank you, operator. Thank you, Edison and Alexis. Well, we are giving some time to the call participants to raise any questions. I also received a few retailer questions. I'd like to raise it to Alexis. The first question I received is: Will you adjust your pricing strategy to help driving sales also in reaction to the market and peers? Alexis, I may pass it to you, please. Thank you. Lotus is an early mover in the electric field, especially for the lifestyle vehicle. We have a good window of opportunity, especially in the markets that we have entered, in a way to fill the gap and allow customers to be focused on that. Now, Lotus will never be involved with cutting prices to build volume or to start a channel. We need to remain luxury positioned, build desirability for the brand, and work on our customers' interactions through our rich heritage in racings and sporting. We do not expect to shift any of the focus to the lower end of the market and compete in pricing and volume gain. Thank you. Thank you, Alexius. We have- Thank you. We have a follow-up question from the line of the Hi. Yeah, just a couple more from me. What's been the initial feedback for Emeya in China? Where do we think we're taking share from? With which competing models? ... as I personally have interacted with many of these car buyers, and I think this time around we have done something really great with the Emeya Blossom. We have gotten a lot of positive resonate, resonates and feedbacks from female drivers and also what do you call families, where they really like the styling. So it's not as big a car in terms of size and everything as compared to the likes of our Eletre, but it gives a very good handle and also a much better handle and also what they call a good feel in terms of the dimension, size, and everything. So, we get the impression, and based on some of those feedback that we got and also the orders, that this resonates very well with female car drivers, which is a breakthrough for the Lotus set of products right now. Yeah. Yes. We do not actually benchmark ourselves against competitors in terms of that, but we understand that definitely 50% of these car customers that see, look at our vehicles are definitely coming from competing brands or same price categories like the Porsche or even others. Now, we, we were surprised to see even more pricey brands customers to actually look at the Emeya as a consideration for expansion on their sports cars and others. So that is something where we gotten that we are filling the gap really well, given that we are a fully electric cars with, what they call, intelligent operating system and also, features embedded on them. Got it. Got it. And on the charging network, I know you have a new partnership there. What’s the—I guess, what was the motivation, and what would be the economics, if any, in terms of that partnership? Well, we think that we are moving up very quickly with customer base. So there is a lot of commonality in terms of partnership with NIO, in terms of the additional charging facilities. So definitely there is the consideration from a geographical perspective. There's a consideration in terms of the locality of the customer base. And definitely it's a additional feature add-on to our already what they call established charging facility network. So definitely we want to be oversupplying or maybe what they call exceeding our expectations of our customer base and giving them the best options in terms of charging facility that's available in major cities, metropolitans and others. Yeah. Awesome. Thank you. Thank you, Edison. Thank you. Once again, for question, please press star one one on your telephone keypad. Okay, so there is no hands raised right now. I may follow up with the second question I just received from the retailer. Alexius, the question is: What are some of the factors underlying the growth in your high margin business? And do you expect this trend to continue? Alexius, pass to you. Yeah. Thank you, Dami. I think, definitely doing our service right, continuously developing on the volume, you will start to see new revenue stream. So we are moving, definitely integrating the business very quickly. We are looking beyond just the traditional new car, old car sales. We are providing more options and providing the customizations, bespoke services for customers. So these are things that is gonna come into play in the second quarter, third quarter, and fourth quarter. Now, like as I mentioned previously, we do not put in a forecast exactly for that, but given that the first run-through during the Beijing Auto Show's feedback was pretty awesome, we think that the take-up rate is definitely something worth watch through and how it can continue to contribute to our gross profit margin evolution. So, this is definitely not one-off, and we think that this is something that is going to be supportive of margin expansion and our more of long-term trajectory. As I mentioned just now, if we do it right, we are definitely looking at 2028, which is the end of the Vision 80 strategy, for more than 30% gross profit margin for the company. Yes. Thank you, Alexius. One more question is as following: Could you share some information on your order book? How have Eletre and Emeya been received across markets as you continue your expansion? Alexius, I pass it on to you. Yeah. We will only be providing specific guidance on the deliveries right now, rather than actually looking at the orders going forward, as we believe that that's the best indicator of our performance. Yeah, but definitely I can tell you that both the Emeya is very well received. I mentioned just now the order book in and the orders in the U.S. is beating our expectations every month till to date. We are also, for every of the market that's going into, we are getting a very good feedback, and we believe that getting into the vehicles through the test ride, through the test ride, is probably the best way to interact and drive drive demand. Now, in terms of the Eletre, we are also getting very nice traction. We think that definitely we are having a good optionality for even substitutions on technologies, ADAS level two, level three, and others. Now, we expect deliveries to grow significantly throughout the latter year, the next three quarters of the year, as we fulfill the new orders received over the first quarter. Yeah. Thank you, Alexius. That's all, all the question I received from retailers for now. Operator, I pass to you. Thank you. I am showing no further questions. Thank you very much for all your questions. I'll now turn the conference to Ms. Demi Zhang for closing comments. Thank you, Amber Lane. Well, thank you, everybody, again, for joining us today. We will conclude the call soon. If you have any further questions, please feel free to contact the IR team of Lotus Tech. You can send us an email or use online request form, which are all listed on our website at ir.lotustechnology.com. This concludes the conference call. Have a wonderful day, everyone. Thank you. Thank you, everyone. You may now disconnect.