Swedish electric vehicle manufacturer Polestar has reported a second-quarter operating loss, underscoring the ongoing challenges faced by the luxury carmaker in an increasingly competitive market. The announcement comes just a day after the company revealed a significant leadership change, replacing its long-standing CEO amid funding issues and declining sales.
Polestar, like many of its EV startup counterparts, has struggled to achieve profitability in a sector marked by intense competition and rapidly evolving consumer preferences. The company’s recent performance has been hampered by extensive delays in new model launches, missed delivery targets, and escalating costs, all of which have contributed to its financial woes.
In a move aimed at steering the company towards a more sustainable future, Polestar announced on Wednesday that Thomas Ingenlath, who had served as CEO since the company’s inception in 2017, would be stepping down. Taking the helm is Michael Lohscheller, a seasoned automotive executive with previous experience leading Opel and other EV startups. This leadership transition signals Polestar’s intent to navigate the challenging road ahead with fresh perspective and expertise.
The financial results released on Thursday paint a picture of a company grappling with market headwinds. Polestar reported a second-quarter operating loss of USD 242.3 million, a slight improvement from the revised USD 273.6 million loss recorded in the same period last year. This modest narrowing of losses can be attributed to the initial impact of the company’s cost reduction initiatives.
However, the company’s gross margin took a concerning turn, swinging to negative 0.7% in the three months ending June, down from a marginal 0.1% positive margin a year earlier. This decline in profitability underscores the intense pressure Polestar faces in a market where pricing strategies have become increasingly aggressive, particularly following Tesla’s price cuts last year.
The challenging demand environment has forced Polestar to offer higher discounts, which, coupled with lower sales volumes, has significantly impacted its financial performance. Revenue for the second quarter fell to USD 574.9 million, a notable decrease from the revised USD 693.3 million reported in the same quarter of the previous year.
Despite these setbacks, Polestar maintains an optimistic outlook for the latter half of the year, reaffirming its guidance for improved performance in the coming months. This optimism is partly fueled by recent developments, including the commencement of production for the Polestar 3 SUV in the United States earlier this month, a move that could potentially boost the company’s market presence and sales in a key automotive market.
Unlike some of its EV startup peers, Polestar has benefited from the strong financial backing of its co-founders, Volvo Cars and China’s Geely. However, this support structure faced a significant test earlier in the year when Volvo announced it would cease further funding for Polestar. In response, Geely has expressed its intention to continue supporting the group, providing a crucial lifeline for the struggling EV maker.
As Polestar navigates these turbulent waters, the automotive industry and investors alike will be closely watching to see if the company can successfully execute its turnaround strategy under new leadership. The ability to innovate, control costs, and meet production targets will be critical factors in determining whether Polestar can carve out a sustainable position in the fiercely competitive electric vehicle market.