Polestar Aims For Cuts From Financial Challenges Amid EV Market Slowdown

Polestar is grappling with major financial hurdles as the electric vehicle (EV) market experiences a slowdown in demand with the company recently reporting disappointing results for 2023 and continuing to face challenges in 2024.

Polestar’s Financial Challenges

In terms of Polestar’s 2023 financial report, released after months of delays due to accounting issues, revealed a 3% decline in revenue to $2.38 billion compared to 2022. The company’s net loss widened dramatically to $1.17 billion, up from $481.5 million the previous year according to Bloomberg. As a result, this underwhelming performance has contributed to a decline in Polestar’s stock value, which has fallen by more than 63% year-to-date and nearly 95% since its spinoff from Volvo Car AB two years ago.

Moreover, Polestar cited several factors for its financial woes including lower sales of carbon credits, higher material and freight costs, and weaker-than-expected demand in key markets. The company also recorded significant non-cash impairment charges totaling $450 million, partly related to unsold Polestar 2 inventory.

Furthermore, the challenges continued into 2024 with Polestar reporting a $232 million operating loss for Q1, 5% wider than the same period last year. In response, the company implemented two rounds of job cuts, decreasing staff numbers by 10% in 2023 and an additional 15% since then. As of now, Polestar is planning further cost-cutting measures across its supply chain to achieve break-even cash flow by the end of 2025.

Despite these setbacks, Polestar is pinning its hopes on new model launches. Notably, the company has started deliveries of its Polestar 3 in Europe and the United States (U.S.), with production set to start in South Carolina this summer. In addition, the Polestar 4 is scheduled to start production in South Korea in the second half of 2025.

Polestar is also facing additional headwinds from increasing tariffs on Chinese EVs. With the United States (U.S.) now charging import levies of 100% and the EU set to implement tariffs of up to 38.1%, Polestar’s reliance on Chinese production could pose further challenges as the company will face provisional tariffs of 20% on its EVs imported into the EU under a proposal by the European Commission according to Reuters.

Positive Initiatives

Despite these setbacks, Polestar is pinning its hopes on new model launches. Notably, the company has started deliveries of its Polestar 3 in Europe and the United States (U.S.), with production set to start in South Carolina this summer. In addition, the Polestar 4 is scheduled to start production in South Korea in the second half of 2025.

The company also reportedly delivered around 13,000 units in Q2, showing an 80% growth compared to Q1. It should also be noted that Polestar also recently unveiled updates on its Polestar 2 with more range and customization options, making the company’s lineup increasingly enhanced.

With Polestar aiming to swiftly navigating through obstacles and capitalize on its new model launches, its future will be determine in the coming months as the competitiveness of the EV market is ramping up.

If you are looking for other Polestar models, we can help you get started. Click Here to find the best deals near you. Want to learn more about EV? Thinking of buying an EV? Head over to EV.com discover more.