Automotive News Europe — 2023-10-16
Automotive Industry
Polestar is taking steps to raise more capital as the electric carmaker struggles with an increasingly strained balance sheet and continued cash burn.
The company may seek to raise as much as $1 bn, according to a filing last week with the Securities and Exchange Commission. The move will allow Polestar to sell different types of shares gradually over a period of time.
Owned by Volvo Car and Chinese billionaire Li Shufu's private investment company, the manufacturer has been struggling to gain market share due to software delays and competition from Tesla and Chinese manufacturers that are selling battery-powered models at lower prices.
The company, which lost $304 m in the second quarter, said in August it is funded through the end of the year and is working on options for the period after that. Its shares have dropped sharply this year amid worries over meeting deliveries.
Polestar cut its full-year deliveries target to as much as 70,000 units, from 80,000 previously.
It had aimed to sell 124,000 cars by this year, according to documents the company put together ahead of its stock listing last year. That was based on a lineup that would have included three models, the Polestar 2, 3 and 4. However, the Polestar 2 is the only one on the road at this time.
The company currently makes vehicles in China and plans to also produce the Polestar 3 at Volvo's U.S. factory near Charleston, South Carolina. The Polestar 3 has been delayed by software issues that have also impacted the launch of its sibling, the EX90 premium large electric SUV.
Last November, Polestar secured $1.6 bn in funding pledges from Volvo and Li's PSD Investment.
CFO Johan Malmqvist said during the company's second-quarter earning call that $1 bn of the $1.6 bn Polestar received from Volvo and Li’s private investment company had been used.
The latest SEC filing should be seen as "standard practice" to give Polestar "flexibility to raise additional capital," a spokesperson for the company said by email.
During an interview with Automotive News Europe in September CEO Thomas Ingenlath said the company was look for additional ways to raise funds.
"One of the reasons we listed the company was so that different owners could come in, making the company that much more colorful and independent," he said. "Of course, that is our ambition, but our small free float [currently 11.6% ] is a hindrance to that happening. So, we definitely have to work on increasing the free float."