Polestar, Volvo and Geely’s luxury electric vehicle subsidiary, has released its latest financial results and unveiled new strategic initiatives during the much-anticipated Polestar Day event in Santa Monica, California. Guess who’s building Polestar’s latest model, the 4?
Polestar Day is a platform for the company to present its technology strategy and innovations to media, investors, and owners. But the event also featured new announcements. A new factory outside China has been made public. The Polestar 4 will be contract manufactured by Renault Korea Motors in Busan, South Korea.
This is not unusual, as the EV company pursues an asset-light strategy, steering away from building its own plants to avoid risk and decrease investment. The company also says it helps them rely on partners’ expertise and scale, but it’s the first all-electric vehicle to leave the facility for Renault Busan. The French carmaker bows on several historical partnerships with Volvo, parent to Polestar.
Aside from South Korea, Polestar operates three factories in China and one in the US, where the Polestar 3 is built for the local market. The Polestar 4 models assembled for export to Europe are made in Hangzhou Bay, China. Renault will concentrate on production for the local market and the United States.
At Polestar Day, the company also showcased StoreDot’s XFC battery capable of 350 kW DC-charging and announced that it would start trials with the high-performance cells in the 5. This makes Polestar the first brand to incorporate silicon-based technology, which promises recharging to 80% in ten minutes and no degrading from such fast charges. A road-going spin-off is expected in 2027.
The financial results from Polestar were a tad less shiny. In the third quarter of 2023, Polestar experienced a significant 41% increase in turnover, soaring to $613 million (€547 million), compared to the $435 million (€424 million) achieved in the same period last year.
But this uptick in performance didn’t turn Polestar into a profitable company, as it reported a loss during Q3 of €155 million. However, in a year-on-year comparison, this represents a 48% improvement from the €299 million loss reported during the same period in 2022.
The company’s deliveries in the third quarter showed promising growth, with 13,976 vehicles handed over to customers, reflecting a 51% increase compared to the previous year.
It’s important to note that only the Polestar 2 model was available for customers during this period. However, these figures showed a slight dip compared to the second quarter of 2023, when 15 800 cars were delivered. This shift was partly due to the carmaker’s transition to the revised 2024 model year.
However, Polestar dampened the forecast for its annual target. Originally aiming for 80 000 deliveries, the automaker adjusted the goal during the latest earnings presentation to “approximately” 60 000 units, blaming high-interest rates and the slowdown in EV demand experienced by several OEMs across different markets. Expectations for its gross margin have been halved to 2%, remarkably lower than its main competitor, Tesla (17,8%).
No price reductions
Both EV makers face the same challenges, including global economic uncertainty, high-interest rates, and varying demand for electric vehicles across different markets. To address these challenges, Polestar has announced plans to reduce costs further, aiming to boost future margins, just like Tesla.
But the vision of CEO Thomas Ingenlath differs from Musk’s. He emphasized that, for the time being, there would be no price reductions as the company remains focused on the premium market rather than mass-market expansion, prioritizing profitability over volume. Tesla has been doing precisely the opposite this year.
Polestar recently received additional capital in the form of loans from its shareholders, Volvo and Geely, amounting to $450 million (€421 million) via term loans.