Polestar adjusts its forecasts as it revamps its strategy for reduced EV sales and increased profits.

• Polestar, a Swedish electric vehicle manufacturer, announced on Wednesday that it has lowered its 2025 delivery target and will need to raise cash to break even that year, even after implementing cost cuts.
• Polestar aims to achieve a gross profit margin of "in the high teens" by 2025, with an annual volume of approximately 155,000 to 165,000 vehicles.
• Polestar’s net loss for the third quarter was $155.4 million

Polestar, a Swedish electric vehicle manufacturer, announced on Wednesday that it has lowered its 2025 delivery target and will need to raise cash to break even that year, even after implementing cost cuts.

The company also cut its guidance for the current year.

Shares rose about 3% in after-hours trading.

Polestar has revised its target for 2025, aiming for a gross profit margin "in the high teens" with an annual volume of approximately 155,000 to 165,000 vehicles. Previously, Polestar had set a goal of achieving annual sales of about 290,000 vehicles by the end of 2025.

Polestar now anticipates delivering approximately 60,000 vehicles in 2023, at the lower end of its previous guidance range, with a positive gross margin of around 2%. Originally, the company had projected deliveries of between 60,000 and 70,000 vehicles in 2023, with a gross margin of 4% for the year.

In 2022, Polestar sold 51,491 vehicles and had a gross margin of 4.9%, while in the first nine months of 2023, its gross margin was 1.1%.

Polestar has received $450 million in new loans from its founding investors, Chinese automaker Geely Automobile Holding and Geely subsidiary, and now expects it will need additional outside funding of about $1.3 billion to achieve break-even cash flow in 2025.

Our CEO, Thomas Ingenlath, stated that by implementing measures to revise our business plan, we are enhancing our cost reduction and efficiency, resulting in a more robust and profitable Polestar, while simultaneously decreasing our funding requirements.

The news came as part of Polestar’s third-quarter earnings report.

Polestar's net loss for the third quarter was $155.4 million, compared to a net profit of $299.4 million a year ago, which was due to an accounting credit related to the decline of its stock price at the time.

In the third quarter, revenue grew to $613.2 million from $435.5 million in the previous year.

In the third quarter, Polestar sold 13,976 vehicles, a 51% increase from the previous year, and a total of 41,817 vehicles in the first nine months of 2023.

At the end of the third quarter, Polestar had $951.1 million in cash and equivalents, a decrease from $1.06 billion as of June 30.

Polestar has announced that its upcoming electric SUV, the Polestar 3, will begin production in China in the first quarter of 2024 and in the United States in the summer of next year. The Polestar 3 is built on a new platform developed by Volvo Cars, which was originally expected to be completed before the end of 2023. However, delays with the platform's software, developed by Volvo, pushed the production timeline back to 2024.

The Polestar 4, a smaller crossover SUV, will begin production in China next week as planned, with deliveries expected to start in China next month and worldwide early next year. Additionally, an upscale sedan called Polestar 5 is expected to go into production in China by the end of 2024.