Lotus lights its ass on fire

1969 Lotus 49B
Courtesy of: ausmotive.com

On our post that covered the 2010 Paris Auto Show, I shared with you Lotus' five sports car debut that stole the show.

Go ahead and look at the pictures again. One is a complete redesign, and the rest are all-new. Each and every one of them production viable, and not just a technological showcase. Ladies and gentlemen, I believe what we see here is not just an injection of five new Lotus models in one auto show (which is already effin' ridic), but a complete future Lotus sports car line-up [Note: I'm leaving out CityCar and the T127 to save from discussing additional topics and risking excess mind boggle-lation].

In another one or two special edition trims, the Elise/Exige product cycle will end, beginning life anew as classics. Another handful of years and the Europa and Evora will be gone as well. It is very probable that in the near future, these five concepts of the Paris 2010 will be all the sports cars we will see at our nearest Lotus showroom floor.

Now I'm not afraid to hold this on account of my limited knowledge capacity, but I've honestly never seen, nor heard of, this done before. Not by any established motoring company, and certainly not from one as small as Lotus.

The  question we should address is "why?"

Don't get me wrong. I'm not asking because I'm unhappy. I think the new cars are fantastic in design and company direction. The new corporate image is handsome, striking, sporting, British, as well as a very bold response to their sports car manufacturing peers. Each model promises exclusivity. The Elise will remain light and possess industry leading handling and chassis development. The Esprit will reignite an old name with a Lexus LF-A V10 engine. The Elite will debut Lotus' hybrid technology, an industry must, for the new age of automobiles.

But we loved the Elise and Exige. The Evora is also immensely popular. Initially, the debut came to me like an answer to a question that no one was asking. There isn't a need for Lotus to be taking such drastic actions, is there?

According to articles I've plowed over the past few hours [reference links of the said articles below], Lotus has been bleeding money and under debt stress for the past 15 years and, now cornered to a wall, CEO Dany Bahar faces two choices-- to eat or be eaten, to fight or flee, to "sell the company or run it to its potential."

Dany Bahar, Lotus Motors CEO
courtesy of: thecarconnection.com

Way to show no one is kidding around. Current annual production at Lotus is 2700 vehicles at sub-$65k. Anticipation of the new model line-up creates a predicted projection of more than double the amount in annual production, that is 6000-7000, and plans to set $65k as the entry price point while the new average is $120k. This is especially worth addressing as new models mean a need for capacity expansion, R&D, outsourcing, marketing, etc. Incremental increases in these departments require exponential increases in investment. A lot of money.

I know it all sounds crazy. The stakes are incredibly high, maybe too high. But the statement, "sell the company or run it to its potential" couldn't be any more serious. In the course of a decade, £770M ($1.2 Bil), most of which I assume will be coming from Proton and the Malaysian government, will be invested on projects by Lotus. For those of you who like a bit of math, that is $120 million per year for ten years.

Frankly, I'd be very surprised if Lotus doesn't eventually ask for additional investments on top of the $1.2 Billion. This isn't pessimism speaking, but we know a decade is a very long time. Their future is uncertain and there will be rainy days.

Good luck to you, Lotus. Your history is long, colorful, and decorated. May you share your contributions with us for many decades to come. And along with Dany Bahar's strong position to "run [Lotus] to its full potential" might I add: "Fortune favors the brave."

Graham Hill
courtesy of: virginmedia.com

editors note:
Initially I wanted to evaluate the financial soundness of Lotus' endeavor by putting it up against a comparable motor company's activities. In my research, I have found that Toyota planned to spend $8.7 billion this year in safety R&D alone. On the other end of the spectrum, Tesla Motors, which is interesting to me as Lotus is their Roadster chassis supplier, possesses a company net worth of approximately $500 Million. An unbelievable, but ultimately useless, bit of information.

references:
http://www.autocar.co.uk/News/NewsArticle/AllCars/253233/
http://www.autocar.co.uk/News/NewsArticle/AllCars/253099/
http://www.autoblog.com/2009/10/07/lotus-ceo-says-automaker-will-again-take-on-ferrari-lamborghini/