According to Reuters and Bloomberg, on January 16, Swedish electric vehicle manufacturer Polestar's new CEO, Michael Lohscheller, stated that the company would need more time to achieve profitability and had delayed plans to expand into additional countries.
Polestar announced the results of a strategic review, stating that the company now expects its free cash flow to turn positive by 2027, later than the previously anticipated timeline of the end of 2025. However, the updated business plan suggests that Polestar's compounded annual growth rate in vehicle sales over the next three years could be between 30% and 50%, with adjusted core profits expected to be positive by 2025.
Michael Lohscheller pointed out that the company anticipates annual retail sales growth of up to 35% over the next three years. He also mentioned that after a rebound in demand for Polestar vehicles in Q4 2024, the company's order volume had increased by about 37%. He said, "In my view, based on the current market environment, this is clearly strong growth."
At the same time, Lohscheller revealed that Polestar plans to produce the Polestar 7 compact SUV in Europe, with partnerships currently being finalized. Manufacturing cars in Europe will help Polestar avoid the European Union's import tariffs on Chinese-made electric vehicles.
Polestar has been struggling with delays in the launch of new models. The automotive market has become more competitive, especially in China, a market Polestar is counting on for growth. At the same time, Polestar is working to recover from a tough year. In 2024, sales of the Polestar 3 and Polestar 4 were disappointing, and the company is also facing market pressure from price discounts. Polestar now expects a year-on-year revenue decline of about 15% for 2024, whereas it had initially forecasted flat revenue growth.
Polestar's CFO, Jean-Francois Mad, stated that the company is currently burning through $100 million to $200 million in cash per month, a situation that is unsustainable and unacceptable. Additionally, Polestar is revising its financial reports from 2022 to the first half of 2024, citing errors in the balance sheet where assets and accrued liabilities were understated.
In December 2024, Polestar secured more than $800 million in one-year term loans from several banks, part of which will be used to repay old loans. The new loan will bring the company's total debt to around $4.4 billion. Polestar is also seeking another one-year term loan of over $400 million, which is expected to be secured later this month.
A statement said that Polestar and its parent company, Geely Holding Group, have been engaged in constructive discussions with investors who remain supportive. Geely Holding Group CEO Li Donghui stated, "Geely Holding Group will continue to support Polestar's development and strategic implementation, including collaborating with Polestar to secure additional equity and debt financing."
Since its separation from Volvo Cars in 2022 and its listing on NASDAQ, Polestar's stock price has dropped by 90%, and its market value has evaporated significantly. In 2024, Polestar received a "non-compliance notice" from NASDAQ after its stock price fell below the $1 threshold. To address this issue, the company has said it is considering a reverse stock split, which typically boosts stock prices by reducing the number of shares in circulation.
Following the release of this report, Polestar's American Depositary Receipts (ADR) fell by as much as 16%.
