Published by Global Banking & Finance Review®
Posted on September 3, 2025
3 min readLast updated: January 22, 2026
Add as preferred source on GooglePolestar's Q2 loss widened to $1.03 billion due to tariffs and price pressures. The company adjusted its cash flow break-even target to 2027.
STOCKHOLM (Reuters) -Swedish electric vehicle maker Polestar reported a wider loss for the second quarter on Wednesday, after tariffs and intensifying price pressure led to an impairment charge of its Polestar 3, sending its U.S.-listed shares down 11%.
U.S. trade tariffs on global trading partners have hit the automotive industry hard, with automakers including Polestar scrambling to adjust supply chains and shift manufacturing to mitigate the impact.
Polestar reported a net loss of $1.03 billion for the quarter ended June 30, compared with a loss of $268 million a year earlier.
The company slashed the recoverable value of the Polestar 3 to $25 million, leading to a $739 million impairment charge.
Sweden-based Volvo Cars, which produces the Polestar 3 in its South Carolina factory, also booked a similar impairment charge in the second quarter related to its ES90 and EX90 due to tariffs and launch delays.
"We will not grow in the U.S. at any cost, because the financial exposure is then too high," Polestar said in a post-earnings call.
The company added that 77% of its sales were generated from Europe, while 8% came from the U.S. in the first half of this year.
Like many other EV startups, Polestar has burned through significant amounts of cash in its push to achieve scale and consistently faced challenges managing its liquidity as well as debt levels.
The company initially aimed to reach cash flow break-even by 2025 but adjusted it in January to 2027, before suspending its forecast due to the uncertainty brought on by tariffs.
While it has long risked breaching certain debt covenants, the company repeatedly negotiated amendments with its lenders and said it had agreed with creditors to revise some of the covenants to remain compliant in the second half of the year.
Polestar also said it had handed over 177 cars as collateral, as part of a financing deal.
While a number of startups including Fisker, Lordstown and Arrival have gone under after running out of funds, a few have backers willing to continue funding loss-making operations.
VinFast's founder has kept the Vietnamese EV maker going as it tries to break even by the end of 2026, while Lucid has received around $8 billion in investments from Saudi Arabia's Public Investment Fund.
Meanwhile, Volkswagen's $5.8 billion investment in Rivian has been seen as a lifeline for the U.S. startup.
Polestar secured a $200 million equity investment from Geely owner Li Shufu through PSD Investment in June.
(Reporting by Harshita Mary Varghese in Bengaluru and Marie Mannes in Stockholm; Additional reporting by Zaheer Kachwala in Bengaluru; Editing by Shreya Biswas)
Polestar reported a net loss of $1.03 billion for the quarter ended June 30, compared to a loss of $268 million a year earlier.
U.S. trade tariffs have significantly impacted the automotive industry, forcing Polestar to adjust its supply chains and manufacturing strategies to mitigate the effects.
Polestar has faced risks of breaching debt covenants but has negotiated amendments with lenders to revise some covenants to maintain compliance.
In the first half of this year, 77% of Polestar's sales were generated from Europe, while only 8% came from the U.S.
Polestar slashed the recoverable value of the Polestar 3 to $25 million, leading to a $739 million impairment charge.
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