Polestar raises more cash

Gothenburg-headquartered Polestar has secured $950mn in additional debt, after its former parent Volvo Cars decided to no longer continue extending funding to the firm and to reduce its stake through a distribution to shareholders.

Three-year loans are being provided by 12 banks including France’s BNP Paribas and Natixis, Spain’s BBVA, East Asia-focused Standard Chartered and HSBC, and China’s Shanghai Pudong Development Bank. Polestar says the cash will provide it “with the funds it requires to finance the next stage of its development and covers a large majority of its estimated financing needs”.

Cash on the balance sheet at the end of December was c.$ 770mn.

More trimming

But the financing will be accompanied by more Polestar efficiencies. With 10pc of the firm’s workforce having been cut since mid-2023, a further 15pc will go this year.

With the Polestar 3 now rolling off the lines in both China and the US and Polestar 4 sales ramping up, prototype production of the Polestar 5 will also accelerate in 2024. Polestar expects volume growth in 2024 but specifies only that it will “support the 2025 volume target”. It is also targeting a double-digit gross profit margin.

But it concedes that volume and margin progression should be expected to be weighted towards the second half of 2024, as the two new products reach a plateau in terms of production and global distribution.

“This marks a new phase in Polestar’s business,” says Polestar CEO Thomas Ingenlath. “The efforts of recent years are paying off.

“We improved our cost basis, secured financing and are ramping up our product offensive. Both SUVs now sharpen the brand, target one of the fastest growing segments in the industry and position us for strong volume growth and profit margin progression from the second half of 2024.

“Securing funding from a syndicate of global banks reflects our partners’ support for Polestar’s growth course. Together with Geely’s full financial support and access to innovative technology and engineering expertise, we have reinforced our path towards cash flow breakeven targeted in 2025,” Ingenlath continues.

“As a strategic partner and direct shareholder in Polestar, Geely will continue to provide full operational and financial support to the iconic performance car brand going forward. We will retain our shares in Polestar and intend to participate in future financing activities when required. Polestar will have full access to technologies and engineering expertise from Geely to realise its global growth targets,” adds Daniel Li, Geely Holding Group CEO.

Polestar had been due to report Q4 and full-year results after market close on Wednesday, but has now postponed the release to an unspecified later date.