Since entering the Nasdaq stock market, Polestar shares have lost more than ninety percent of their value and have been trading below one dollar for a long time. This is the threshold below which there is a risk of delisting.
Polestar is going through a difficult period, which contrasts sharply with the big plans to start production in Europe, more precisely in the new plant near Košice. Although the Chinese car company records a rapid increase in sales, but an even faster growth in losses, a collapse of shares on the stock exchange and is undergoing a painful austerity. On the other hand, it promises a new Polestar 7 compact model, which should be assembled in the east of Slovakia from 2027. The question of whether the car company will be in sufficiently good financial condition before the start of its production is much more open today than when it entered the stock market.
In the third quarter, Polestar reported a net loss of about $365 million, more than a year ago, even though sales rose by more than a third in the same period. Although the company sold more vehicles, on average it reworked each car and the gross margin fell into the red. The result was additionally burdened by an accounting item associated with the residual values of cars in leases, especially in North America, where the prices of used electric cars are falling faster than car companies had originally anticipated. In such contracts, Polestar has to pay the difference between the guaranteed and the real value of the vehicle, which turns into a significant financial brake at higher sales volumes.
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Financial results are also worsened by customs and geopolitics. Most Polestar models are manufactured in China, which is why they are subject to increased import tariffs in the European Union and the USA. In Europe, this reduces price competitiveness, in the United States, car sales of cars made in China are practically unsustainable. Therefore, the brand is changing its strategy – it is strengthening Europe, withdrawing from the American market and remaking the portfolio. The Polestar 5 as a technological flagship is aimed at a narrow group of customers, while the real volume model is to be the Polestar 7 – a smaller SUV aimed at a wider clientele, which will roll off the lines of the planned factory near Košice.
The problems are also reflected in the confidence of investors. Since entering the Nasdaq stock market, Polestar shares have lost more than ninety percent of their value and have been trading below one dollar for a long time. This is the threshold below which there is a risk of delisting. The management therefore announced the so-called reverse stock split: a technical adjustment in which the number of shares is reduced and their price formally increased, although the total shareholder value remains unchanged. However, this is only a cosmetic step that does not solve the problem of the growing debt itself. This is also why some analysts point out that Polestar is teetering on the edge between ambitious growth and the risk that it will simply run out of money before it reaches profitability and go bankrupt.
Inside the company, a tough search is underway. The number of employees decreased by about a fifth, and expenses for in-house development and technology were significantly cut. The brand relies even more on the technical background of the Geely group and sister company Volvo. On the one hand, it reduces costs and can speed up the introduction of new models, on the other hand, it weakens Polestar’s independence as a premium brand with its own identity. Combined with the slump in shares and the need to negotiate concessions on loan terms, this raises doubts about whether the company has a strong enough foundation to operate in the long term.
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Against this background, the production plan in Košice seems almost like a “rescue”. The new plant, which is being built by Volvo, should have a capacity of around 250,000 cars a year and benefit from extensive state support and infrastructure development in the region. The Polestar 7 is supposed to open the door to Europe for the brand without the customs burden associated with Chinese production.
The advantage is that the Košice plant will not be based only on Polestar – the basis is to be the production of Volvo models. If Polestar 7 is delayed or produced in smaller numbers, another brand from the concern can take over part of the capacity. From the point of view of employment and investment utilization, this is an important risk reduction. However, a more important question remains open for the Polestar brand itself – whether it can prove in the coming years that it is not just a short-term experiment from the era of electric car euphoria, but a viable car company that will establish itself among the strong competition of large concerns and aggressive Chinese newcomers.
