After major investor Volvo decided to reduce its stake and cut funding for Polestar earlier this year, the electric vehicle company has gone in search of $1.3 billion in new financing. It secured a three-year $950 million lifeline loan from a banking syndicate led by BNP Paribas, and told investors it plans to continue raising the rest of the funds this year. Volvo’s parent company Geely Holdings, a Chinese company whose investment portfolio includes Levc, Lotus and Smart, became the second largest shareholder in the company, while Volvo retained 18 percent and is still owed $1 billion through an outstanding convertible loan.
The plan, Polestar told investors, is to target double digit margins by the end of the year, and on its latest earnings call, investors were told the company is “working intensively” to improve cash flow and still has plans to break even by the latter part of 2025. The company’s new facility in South Carolina will play a big role in whether this can be achieved – analysts expect it to help with production volume and qualify its electric vehicles for the Electric Vehicle Tax Credit in the US up to $7,500 depending on the vehicle’s specifications, which would hopefully appeal to its customer base. Questions have been raised increase whether Polestar will decide to postpone sales of the Polestar 4 in the US until it can move production to South Korea in 2025 to avoid tariffs from China.
“There’s increased competition and interest rates have risen significantly, so a lot of these companies like Polestar are still struggling to grow,” says Andres Sheppard, a senior equity analyst at financial services firm Cantor Fitzgerald.
However, Polestar’s adjusted financial results for 2023, released on Friday after a long delay, put a slight cloud on its outlook: its net loss grew to $1.17 billion, operating losses soared more than 11 percent from $1.29 billion to $1.46 billion, and its revenue fell 3 percent to $2.38 billion. These losses were not offset by a 6 percent increase in car sales. Polestar missed its sales target of 60,000 vehicles (reduced from 80,000 in early 2023), delivering 54,600 vehicles last year.
The late arrival of these results was in itself a warning sign: if their publication had been extended until July, Polestar was at risk of being delisted on the Nasdaq, as a result of failure to meet required financial deadlines. The delays have been linked to accounting errors.
The company’s share price has suffered a steady decline Over the past year, the company’s shares had fallen 8 percent in premarket trading on Tuesday, which Ingenlath said was “not fair.” “We view our current stock price as not reflecting the value of our company, either now or in the future,” he told investors.
This means the gap between where Polestar is and where it wants to be is wider than expected. Projected revenue figures compiled by market research firm Pitchbook show the company is aiming to make £3.51 billion ($4.43 billion) in revenue this year, and will grow that figure by 145.5 percent to £8.62 billion ($10.9 billion) by 2026. This would be an ambitious feat for current global sales boss Kristian Elvefors, the former Volvo UK managing director who replaced Mike Whittington earlier this year. Elvefors has a plan expand the company’s retail presence in Asia, Europe and Latin America by 2025, and allow customers to configure and order cars online. However, the news is worrying Car rental giant Hertz has put its plans on hold buy tens of thousands of Polestar cars this year, undoing an estimated $3 billion deal negotiated in 2022 that promised to cover a quarter of its fleet with Polestars by 2024.
