EV maker Polestar's quarterly loss widens as tariffs, pricing pressure weigh on margins
Polestar's First-Quarter Financial Performance and Market Challenges
By Harshita Mary Varghese and Marie Mannes
Quarterly Loss and Market Reaction
May 7 (Reuters) - Sweden's Polestar reported a bigger first-quarter loss on Thursday, as pricing pressure and U.S. tariffs offset stronger sales, sending its shares plunging nearly 8%.
Impact of Tariffs and Pricing Pressure
Polestar, majority-owned by China's Geely Holding, has rolled out discounts to attract cautious buyers as U.S. tariffs compress margins and raise manufacturing costs.
Sales Performance and Regional Focus
Despite a strategy focused on Europe, which accounted for 78% of its sales and led to a 7% increase in sales during the January-March period, its net loss widened to $383 million in the first quarter from $166 million a year ago.
CEO Commentary and Outlook
"The world around us continues to throw up challenges. This is reflected in our results for the first quarter," Polestar CEO Michael Lohscheller said on a call to analysts, providing no financial outlook for the year.
Revenue Breakdown and Model Mix
Revenue was broadly flat at $633 million as it sold fewer higher-priced Polestar 3 models and a greater share of Polestar 4 cars, which accounted for 9% and 67%, respectively, in the quarter.
Product Strategy and Upcoming Models
To save on costs, Polestar has opted to roll out refreshed versions of aging models rather than launching all-new ones. It expects deliveries of a new Polestar 4 variant to begin later this year, followed by a refreshed version of the sedan Polestar 2 in 2027. The automaker's next fully new model comes in the form of the compact Polestar 7 SUV thereafter.
Funding, Cash Position, and Expenses
Capital Raising and Green Finance
Like many EV startups, Polestar is burning cash to expand its line-up and has in recent months secured loan and equity funding from Geely and banks, while Volvo Cars is converting debt into equity. Polestar also secured approval for a 50 million euro addition to its green trade finance facility.
Cash Position and Expense Growth
Its cash position was $676 million at the end of the first quarter, down from $1.16 billion three months earlier.
First-quarter expenses also rose on higher sales commissions, one-off personnel costs and marketing.
Looking Ahead: Upcoming Announcements
The company expects to publish its second-quarter sales on July 9.
(Reporting by Harshita Mary Varghese in Bengaluru and Marie Mannes in Stockholm; Editing by Maju Samuel)
