Lotus Technology preparing to float on stock market

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China-based Lotus Technology company will build non-sporting electric models.

Lotus Cars is pushing ahead with plans to float its Lotus Technology division on the stock market in a move that would value it at around $7-8 billion, the company has said.

Lotus is in the middle of a roadshow starting in China and is currently in London to give potential investors a sneak preview of next year’s electric SUV, codenamed Type 132.

Lotus Type 132 SUV teaser 005 ljwuri

The Geely-owned brand told investors that it plans to sell 100,000 cars per year by 2028, of which 90,000 will be electric saloons and SUVs produced by Lotus Technology.

The purpose of the roadshow is to “take the temperature” of investor enthusiasm in buying Lotus stock, a spokesman said.

He said the company favours an IPO (initial public offering) over the SPAC (special purpose acquisition company) method of listing that was recently employed by Geely stablemate Polestar, despite the extra scrutiny involved in the more traditional route to market.

Lotus aims to float in 12-24 months, but the decision over whether to do so in Asia, London or New York hasn’t yet been taken, the company said.

The reaction in China to the potential float has been “strong”, the spokesman said.

The decision to list Lotus Technology and not Lotus Cars, which focuses on the brand’s traditional sports car business, is down to the ownership structure of the divisions, the company said.

Lotus Cars is 49 per cent owned by Etika Automotive, a company controlled by Malaysian billionaire Syed Mokhtar Al Bukhary, who formerly owned Lotus through another company, DRB-Hicom. Etika meanwhile has a smaller stake in Lotus Technology at 30 per cent.

Lotus will follow the launch of the Type 132 next year with a Porsche Taycan-size electric sedan codenamed Type 133 in 2023 and then a “ground-breaking” smaller SUV in 2025. The Type 135 electric sports car will arrive in 2026 and eventually replace the imminent ICE-powered Lotus Emira.

The electric SUVs and sedan will be built in a new $1.7 billion factory in Wuhan, China. The Geely-owned plant has the capacity to build 150,000 cars per year for sale in China and globally.

It also has a test track, like Lotus’s headquarters and historic manufacturing base in Hethel, Norfolk.

Lotus’s transformation from struggling maker of niche sports cars to potential global rival to Porsche began in 2017, when Geely bought a majority stake and vowed to overhaul it.

Geely’s investment of more than $2.8bn included a major upgrade of Hethel, the addition of a design centre in Coventry and a new technical hub in Frankfurt, Germany.

Lotus CEO Matt Windle described the extent of the transformation as something “never undertaken in the automotive industry before”.

Is Lotus a wise buy?

On the face of it, buying stock in Lotus Technology looks a risky bet.

You’re not owning any part of the Lotus Cars sports car division; the size of the market for an electric Lotus SUV or sedan tilting at Porsche or even Bentley is uncertain at best; and the stock market isn’t a happy place right now for young EV companies.

For example, Rivian is 64 per cent off its highest stock price, according to data from the Financial Times, while Lucid is down 57 per cent and Fisker is down 60 per cent.

But Lotus is undeterred. It points to technology leadership (for example, in in-built lidar for autonomous driving); an “asset-light” structure that means it taps into Geely’s global manufacturing capability without splashing out big sums itself; and the fact it has a resonant brand name, at least in some countries.

The company’s strong Chinese connections will also boost it in the world’s largest new car market, which increasingly leans towards home-grown, technology-led products.

As for not getting to own a chunk of Lotus Cars, that’s probably a good thing, given its financial history.

Nick Gibbs

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