During a business update on Polestar’s financial performance, CEO Michael Lohscheller shed some light on the upcoming challenges and solutions for the underperforming car maker. As a replacement for the 2, the new compact SUV 7 will be built in Europe. To sustain its U.S. business, the company will also navigate around the Biden ban on Chinese tech.
Swedish EV maker Polestar is closing a tough 2024, during which tripling its portfolio didn’t result in more car sales. After overhauling its management during the fall of last year and revising its sales model, the company is readdressing its goals for the future.
The best is yet to come
During an earnings call, Lohscheller announced annual retail growth of 30-35% through 2027, even as it faces pricing pressures and the looming threat of a U.S. sales ban. Looking ahead to 2025, Lohscheller predicts it will be “the best year in the history of Polestar.”
Remaining optimistic in these dire times—especially for EV makers—Polestar expects positive free cash flow by 2027, two years later than previously anticipated. The revised strategy heavily relies on new models, a simplified production framework, and an expanded retail footprint.
Sister model to the EX30?
As for new models, the company bets on the larger saloon 5 GT (coming in the second half of this year) and the electric roadster 6 (slated for 2026). But the most important star will be the 7, heir to the 2, the model that launched the brand. The 7 will be a compact SUV smaller than the two and an entry-level model.
Several media outlets suggest it could be built on the SEA platform, which also underpins the Volvo EX30. This is the second-best-selling EV in Europe and a big hit for the Swedish brand, which is scheduled for extra production in the Ghent factory.
As Lohscheller announced the 7 to be produced in the EU (to avoid tariff hikes), this could put the Belgian factory on the radar for assembling its first Polestar models in history.
“Unacceptable”
However, another candidate is Volvo’s plant under construction in Slovakia. However, as Head of Global Production Geert Bruyneel stated, this site will build the SPA3 architecture which is developed as an unprecedented modular system spanning lengths from supercompact to extra large.
As such, the final location for assembly of the 7 remains a guess. But a new plant seems off the table due to elevated costs, which Polestar desperately wants to reduce as it currently loses 100 million dollars per month.
According to Polestar CFO Jean-François Mady, the situation is “unacceptable.” Lohscheller also plans to unwind the current multi-platform technology and shift to a mono strategy, which puts SPA3 in the middle of the picture.
Shift towards wholesale retailing
We do know that the upcoming 7 series will arrive in 2027 and introduce a completely new design direction. In August last year, Polestar appointed Philipp Römers (ex-Audi) as its new head of design. “The compact SUV segment is one of the biggest profit pools globally,” Lohscheller said. “Polestar 7 will make us a strong player in that space while expanding our footprint in Europe.”
In the immediate future, Polestar plans to increase its global retail presence by increasing its stores from 140 to 300 by 2026. The expansion includes a shift toward traditional wholesale retailing, a departure from the company’s current customer-order-based sales model in markets like the U.S.
Ban on Chinese tech
While this strategy could boost throughput, it raises concerns among retailers about thin margins. Polestar continues to negotiate dealer incentives to align profitability with its direct-to-consumer approach.
As for Polestar’s future in the U.S., the company acknowledged the potential impact of the Biden administration’s recent ban on Chinese hardware and software in connected vehicles, set to take effect in 2027. Last October, Lohscheller said this would kill the brand’s presence in the U.S.
But apparently, the CEO has found a way around it, as he pledged to find solutions to remain compliant. “The U.S. is of the highest importance,” he said. We will work to ensure our vehicles meet all requirements by the 2027 model year.”
Comments
Ready to join the conversation?
You must be an active subscriber to leave a comment.
Subscribe Today