Polestar cuts 15% of personnel, Volvo stops funding (update)

Worldwide, the Chinese Geely daughter Polestar will cut 450 jobs or 15% of its current workforce. Lower demand for its cars and a very competitive environment (Chinese manufacturers, Tesla lowering its prices regularly) forced the EV manufacturer to react.

Meanwhile, Geely’s sister Volvo Cars, with 48% a critical Polestar shareholder, will stop funding Polestar and hand responsibility for the brand to mother company Geely, which is Volvo’s majority shareholder.

According to a Polestar spokesman, his company has “to adapt its size to the scope of its activities”. He cites a very challenging market as the main reason. The EV market currently suffers from weak demand, high inflation, and dwindling subsidies.

80 000 cars target

Initially, Polestar had a target of producing 80,000 cars in 2023. Intermittently, this target was lowered to 70,000 and, in November, to 60,000 vehicles. Finally, there were only 54,600 built. In the fourth quarter of last year, only 12,800 rolled off the line, 8% less than in the third quarter.

Polestar announced a new strategy in November. Volvo’s sister company (under the Geely holding) wanted to become less dependent on its most essential lenders, Volvo and Geely. “As a part of this strategy, we have to adapt the size of our company,” the company explained. “Unfortunately, this influences the workforce too.”

Swedish-listed Volvo Cars’ heavy involvement in Polestar, where it owns around 48 percent of the shares, has been criticized by analysts who see the stake as a drag on Volvo’s resources. Volvo said it considered handing Polestar shares to Volvo’s shareholders, making Geely a prominent direct brand owner.

In a separate statement, Geely said it welcomed Volvo’s decision to focus its resources on its own development. The Chinese group said, “Geely Holding will continue to provide full operational and financial support to the independent exclusive (Polestar) brand in the future. This support will not require a reduction of Geely Holding’s shareholding in Volvo Cars.”

Profitability first

Polestar CEO Thomas Ingenlath also stressed that his company would prioritize profitability over outright volume. This means developing higher-priced luxury models and abandoning the lower market segment in the car business.

Ingenlath was also hesitant about entering a price war against direct competitors like Tesla. The much larger American EV manufacturer warned recently of a receding growth path in 2024 and shrinking profit margins due to the price war with Far Eastern competitors.

Managing reshuffle

Meanwhile, the Swedish electric performance car brand announced a reshuffle of its Board of Directors and Management Team. Winfried Vahland has been appointed as the new director. Winfried was previously CEO and President of Volkswagen Group China, Chairman of the Executive Board of Skoda Auto, and a Board of Volvo Cars member. He is currently a Member of the Supervisory Board of Proton Holdings.

Håkan Samuelsson, former Volvo CEO and now Chairman of Polestar’s Board of Directors, says: “I’m delighted to welcome Winfried to the Board. The company will benefit from his significant automotive industry experience and track record of delivering profitable growth through a combination of successful business and product portfolio development.”

Per Ansgar has been appointed Chief Financial Officer (CFO). Per joins Polestar on a transitional basis while a formal search is undertaken. He brings close to 30 years of experience in senior controlling and finance roles, including CFO of Geely Sweden Holding, Deputy CFO of Volvo Cars, and CFO of Volvo Cars China. He will take over the financial responsibilities from Johan Malmqvist.

Kristian Elvefors has been appointed Global Head of Sales. He has over 20 years of experience in senior commercial roles in the automotive industry, most recently as Managing Director of Volvo Cars in the UK. He will take over Mike Whittington’s responsibilities.

Thomas Ingenlath, Polestar CEO, commented: “I would like to thank Johan and Mike for their many years of combined service and commitment to Polestar; we all wish them well in the future. I am delighted to welcome Per and Kristian to Polestar. Their combined experience and skills will be key in delivering on our business plan: securing profitable growth through our growing model line-up and reaching cash flow breakeven in 2025.”

The future

Thomas Ingenlath, Polestar CEO, concludes: “Polestar 4 has been very well received in China, and ramping up production was an important milestone for us. Sales of our SUV coupé will start in Europe and Australia in the coming weeks. With the first deliveries of Polestar 3 expected in the summer, our shift from being a one-car company to a three-car company positions us for a transformative and exciting 2024.”

Polestar is eager to introduce its upcoming models. Relying solely on the Polestar 2 sedan has become challenging. By 2025, the company will offer four models.

Following the start of production and the first deliveries of the Polestar 4 in China in late 2023, online sales in Europe are now open, with configurators raking up prices. The starting price in Euro markets is €61,900  plus the transfer fee, which drives the price up to €63,200.

The company expects deliveries to start in August 2024 and production for the European markets in mid-2024. As mentioned, these will be imports since the Polestar 4 has been rolling off the line at Geely’s plant in Hangzhou Bay since late 2023.

Polestar expects to post its preliminary unaudited financial and operational results for 2023 on Thursday, 29 February 2024, before the New York market opens.

Polestar 4 has been in production in China since November last year. From now on, it can be ordered online in Europe and Australia /Polestar

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