Published by Global Banking and Finance Review
Posted on December 16, 2025
Dec 16 (Reuters) - Sweden's Polestar said on Tuesday it has entered into a loan agreement worth up to $600 million with its majority owner, China's Geely Holding, at a time when the company is grappling with a cash crunch amid a broad slowdown in EV demand.
The shareholder loan, to be given through Geely's Swedish unit, is "subordinated," which means that it does not count towards Polestar's debt covenants, which are set at $5.5 billion, a spokesperson for the company said, adding that the company is working to secure more equity.
The final tranche of $300 million of the loan would require the lender's consent, based on Polestar's future liquidity needs, the company said in a statement.
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 and debt levels.
Polestar, which has long risked breaching certain debt covenants, has repeatedly negotiated amendments with lenders and agreed with creditors to revise some of the covenants to remain compliant throughout the year.
The company in June secured a $200 million equity investment from major shareholder PSD Investment, a company controlled by Geely Holding founder Li Shufu.
Geely also owns Volvo Cars <VOLCARb.ST>, Lotus and other auto brands.
(Reporting by Juby Babu in Mexico City and Marie Mannes in Stockholm; Editing by Shinjini Ganguli)
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