Automotive News Europe — 2024-07-02
Automotive Industry
Polestar has struggled with cash burn amid slower-than-expected sales.
Polestar is making more cost cuts after losses deepened in the first quarter as tariff barriers grow and price pressures increase for electric-vehicle makers.
The Swedish-based company, controlled by China's Geely, posted a $232 m operating loss for the three months through March 2024, 5% wider than the comparable period in 2023. Revenue plunged to $345 m from $543 m a year earlier (2023).
Polestar, once in the vanguard of the electric-car movement, has lost nearly 95% of its value since spinning out of Volvo Cars two years ago (2022). Polestar has struggled with cash burn amid slower-than-expected sales.
After two rounds of job cuts — reducing staff by 10% in 2023 and then by another 15% since then — Polestar said it's adapting its business plan, which will include "additional mitigating actions."
The steps will include reducing costs across the supply chain, rather than additional staffing cuts, with the aim of reaching break-even cash flow by the end of 2025, a Polestar spokesperson said on 2 July 2024.
The company delivered about 7,200 cars in the first quarter and more than 12,000 in the following three-month period.
CEO Thomas Ingenlath said the company's plan for seven new market launches in 2025 will be key growth drivers.
New launches
Polestar has said previously that its two new SUVs, the Polestar 3 and 4, will help boost sales to more than 155,000 vehicles in 2025.
Deliveries of the Polestar 3 in Germany are set to start in July 2024, while the Polestar 4 will begin reaching customers in August and September 2024. In the US, the Polestar 3 started arriving to customers in June 2024 while the Polestar 4 is due to arrive in November 2024.
Currently, Polestar builds a majority of its cars in China. The company faces provisional tariffs of 20% proposed by the European Commission on cars it imports into the European Union from China and duties of more than 100% in the US.
The company has been working to reduce its reliance on Chinese production. Output of the Polestar 3 is due to start in South Carolina in the US this summer, the company said. Production of the Polestar 4 will start in South Korea in the second half of 2025.
The Polestar 2, its biggest seller to date, will continue to be made exclusively in China.
Like other EV makers, Polestar faces a worsening demand outlook. A price war started last year by rival Tesla has left many automakers struggling to sell cars they have already produced.
The company has a cash flow break-even target for 2025 which it risks not meeting due to the tariffs and price war, but said it hopes its planned actions will help mitigate such problems.
In its quarterly report, the automaker said its results had been hit by both lower sales and higher discounts.