Polestar Automotive Holding UK, renowned for its electric performance cars, has rolled out a revised business plan, setting a course for enhanced profit margins and a leaner funding model to achieve cash flow equilibrium by 2025.
The Swedish marque is recalibrating its operational focus, pivoting from volume to profitability. With an aim for a high-teen gross margin by the fiscal year 2025, Polestar targets the production of 155,000 to 165,000 cars annually.
This objective is expected to be met through a more lucrative product range featuring four models, a streamlined cost structure, and strategic adjustments in pivotal markets, including a fresh joint venture endeavor in China and profitability enhancements in the U.S. sector. Cost-saving initiatives, such as headcount reductions earlier this year, are part of Polestar’s ongoing cost vigilance.
Thomas Ingenlath, Polestar’s CEO, states, “By having taken the necessary steps to re-work our business plan, we are reducing costs and improving efficiencies to create a more resilient and profitable Polestar – and reducing our funding need at the same time.”
Polestar’s ambitious projection for a 2025 cash flow break-even underlines the efficacy of its asset-light model, with profitability taking precedence, buoyed by an impressive quartet of exclusive performance vehicles.
Solidifying their allegiance to Polestar, both Geely Holding and Volvo Cars have augmented the firm’s liquidity. Volvo Cars has pushed back the due date of its shareholder loan by three years to June 2027, supplementing it with an additional $200 million, cumulating to a $1 billion infusion. Similarly, Geely Sweden Automotive Investment AB, linked to Geely Holding, is contributing a $250 million loan mirroring Volvo’s terms, with the same 2027 maturity. These financial arrangements offer an optional conversion to equity.
With this fortified business strategy and the support from its principal shareholders, Polestar anticipates a need for approximately $1.3 billion in external financing before it hits its break-even target in 2025.
Polestar, along with its principal investors, is diligently crafting a comprehensive financing approach to secure the remaining capital, which is likely to encompass a mix of debt and equity solutions.
