Finance
Polestar secures $600 million loan from majority owner Geely Holding
Published by Global Banking and Finance Review
Posted on December 16, 2025
2 min readLast updated: January 20, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on December 16, 2025
2 min readLast updated: January 20, 2026
Polestar secures a $600M loan from Geely to address cash flow issues amid a slowdown in EV demand, with part of the loan contingent on future liquidity needs.
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)
Liquidity refers to the ease with which an asset can be converted into cash without significantly affecting its price. It is crucial for businesses to meet short-term obligations.
Equity investment involves purchasing shares of a company, providing the investor with ownership rights and a claim on a portion of the company's profits.
A cash crunch occurs when a company has insufficient cash flow to meet its short-term financial obligations, often leading to liquidity issues.
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