On Thursday afternoon, Polestar management presented a rescue plan to keep the Chinese brand afloat. They will build a new one in Europe.
Polestar has posted a significant loss, but has also announced plans to produce cars in Europe. The company, known for its electric cars, reported a net loss of $323 million (approximately DKK 2.3 billion) for the third quarter of 2024.
Despite the economic challenges, Polestar has ambitious plans for the future. A central part of the strategy is to launch new models, including the Polestar 7, a compact SUV to be produced in Europe.
"Polestar 7 will be everything our customers expect from us, both in terms of design and performance," says Polestar's new head of design, Philipp Römers.
Polestar 7 is expected to play a crucial role in the company's efforts to turn things around and achieve profitability.
"We expect 2025 to be the strongest year in Polestar's history," says CEO Michael Lohscheller.
In addition to new car models, Polestar is betting on revenue from the sale of emissions rights. The EU's strict emissions regulations allow Polestar to sell CO2 credits to other car manufacturers.
Polestar expects to generate a triple-digit million dollar amount in emissions rights already this year. Over a number of years, the sale of emissions rights could potentially generate billions in revenue. Polestar has already established a carbon pool with four manufacturers for 2025.
However, Polestar's financial situation remains challenging. The company had a negative gross margin of 2.4 percent on cars sold in the third quarter. In September 2024, Polestar had only $501 million in cash.
To strengthen its financial position, Polestar secured new bank loans of $800 million in December.
Polestar has struggled to meet its sales targets. The plan to sell 290,000 cars by 2024 resulted in fewer than 50,000 units sold.
Michael Lohscheller, who took over as CEO in 2024 after the dismissal of Thomas Ingenlath that same year, has promised to improve Polestar's results.
Lohscheller presented its rescue plan at a press conference on Thursday. The plan includes targets for positive adjusted EBITDA before depreciation and interest expenses already this year, as well as positive cash flow in 2027.
The market has reacted with some skepticism to Polestar's plans. The stock fell ten percent in trading before the Nasdaq opened.
Polestar's future depends on whether the company can realize its ambitious goals and turn around a thundering loss-making business.
