Polestar, a Swedish manufacturer of electric vehicles, said on Wednesday that it will still need to raise money in order to break even in 2025, even with cost reductions.
Additionally, the company lowered its current year guidance.
After-hours trading saw a 3% increase in share prices.
For 2025, Polestar stated that it now aims to achieve a gross profit margin “in the high teens” with an approximate annual volume of 155,000 to 165,000 vehicles. By the end of 2025, Polestar aimed to sell roughly 290,000 vehicles annually at the time of its IPO last year.
Polestar has revised its 2023 delivery forecast to “approximately 60,000” cars, which is at the lower end of its prior guidance range and will have a roughly 2% positive gross margin. With a 4% gross margin for the year, the company had previously projected deliveries of between 60,000 and 70,000 vehicles in 2023.
Polestar had a gross margin of 4.9% in 2022 and 1.1% in the first nine months of 2023. In 2022, it made 51,491 car deliveries.
Polestar added that it is making further cost-cutting measures. Its original investors, the Chinese automaker Geely Automobile Holding and the Geely subsidiary Volvo Cars, have given it new loans totaling $450 million. It now anticipates needing more outside funding of roughly $1.3 billion in order to achieve cash flow break-even in 2025.
In a statement, CEO Thomas Ingenlath stated, “We are reducing costs and improving efficiencies to create a more resilient and profitable Polestar – and reducing our funding need at the same time by having taken the necessary steps to re-work our business plan.”
The information was included in Polestar’s third-quarter financial report.
$155.4 million was Polestar’s net loss for the third quarter. Polestar recorded a $299.4 million net profit a year ago, largely attributable to an accounting credit associated with the company’s stock price decline at the time.
Compared to the same period last year, when revenue was $435.5 million, it increased to $613.2 million in the third quarter.
Polestar delivered 13,976 cars in the third quarter of 2023, a 51% increase over the same period last year. In the first nine months of 2023, the company delivered 41,817 cars.
Polestar’s cash and equivalents decreased to $951.1 million at the end of the third quarter from $1.06 billion at the end of June 30.
Polestar announced that production of its forthcoming Polestar 3, a sizable electric SUV, is scheduled to start in China in the first quarter of 2024 and in the US in the summer of that same year. Volvo Cars developed a new platform that serves as the foundation for the Polestar 3. It was initially anticipated to be completed by the end of 2023, but Volvo-developed platform software delays caused it to be delayed until 2024.
According to the company, the production of the smaller crossover SUV, known as the Polestar 4, will start in China the following week. Next month in China, and early next year in the rest of the world, deliveries are anticipated to start. By the end of 2024, a new model, the Polestar 5, an upscale sedan, is anticipated to begin production in China.
