Polestar secures nearly 880 million euro lifeline in funding

The saga around Polestar’s financing opens up a new chapter, as the EV startup managed to draw in some serious funding from international banks. With parent Geely’s commitment, the company is secured to achieve its short-term targets.

In the wake of Volvo Cars’ decision to sever ties with Polestar, the EV brand has swiftly pivoted, securing substantial external funding of 950 billion dollars (€879 million) from a prestigious consortium of 12 international banks. These include BNP Paribas, Natixis, Standard Chartered, BBVA, HSBC, and SPDB.

Three-year loan

Structured as a three-year loan facility, this funding furnishes Polestar with the necessary financial runway to pursue its development objectives and achieve its 2025 business milestones. Despite Volvo’s departure, Polestar sticks to its mission stated late last year. Its 2025 goal consists of selling 150,000 to 165,000 units (almost half the volume of the original plan), targeting a profit margin of 9%.

Filling the gap Volvo left behind, the banks were convinced by Geely’s continuing engagement, including access to technologies and services. Geely CEO Daniel Li confirmed that his company would not refrain from backing Polestar. He said: “We will retain our shares in Polestar and intend to participate in future financing activities when required.”

Efficiency program

After Volvo’s participation drain, Polestar wasn’t in debt. Still, doubts arose whether the EV maker could reach its 2025 targets as budget support narrowed down to co-owner Geely and provisional cash was at $770 million. Shares had taken a severe blow on the stock market but recuperated swiftly after the company confirmed the funding round.

Last year, it proved a rough road for Polestar, as it missed its revised delivery target by around 10%, with demand for its sedan 2 slowing down and the product offensive of more popular cross-overs, the three and coupe 4, not having taken off. However, CEO Thomas Ingenlath sticks to the forecasted cash-flow break-even by 2025.

To the press agency Reuters, he added: “We must be able to concentrate on rolling out our car programs, and it provides the funds needed to complete the model program that we have with Polestar 2,3 and 4 this year, and the five joining in 2025.” An efficiency program supplements the financing round. After a reduction of 10% of jobs in 2023, another 15% will be eliminated in 2024.

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