Lotus, the iconic British automaker, is poised to halt production at its historic Hethel, Norfolk factory after 59 years, with plans to shift manufacturing to the United States, according to a report by Autocar. 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.

Lotus To End Uk Production, Eyes Us Move For Electric Vehicle Strategy

Tariff Pressures Prompt Strategic Shift

The decision to consider relocating production 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 localisation is a feasible plan,” said Lotus CEO Feng Qingfeng during the company’s first-quarter earnings call on June 25, 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.

Electric Vehicle Market Challenges

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 (converted from £2 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.”

Pivot to Hybrid Technology

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.

The Hethel plant, which produced 5,000 Emiras last year against a 10,000-unit capacity, was eyed for projects like the Polestar 6 electric roadster. “I think we could build it,” Windle said, acknowledging the need to transition from ICE to electrified platforms.

Economic and Industry Implications

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 (converted from £100 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, a sentiment echoed by a former Lotus executive who called the closure plans “a disgrace.” 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.