Speaking of Polestar cars, I believe many Chinese friends will feel very unfamiliar, as Volvo's previous sub-brand, Polestar cars are also born with a golden spoon, but recently some media have exposed the news that Polestar cars lost 150,000 yuan per car sold last year, what should we think of this? Can Polestar avoid delisting?
1. Polestar lost 150,000 yuan for every car sold last year?
According to Jiemian News, Polestar has lost nearly 95% of its value since it was spun off from Volvo Cars two years ago and listed on the U.S. stock market. The seven-year-old start-up electric vehicle company is on the verge of delisting, and its financial performance is deteriorating.
On June 28, Polestar announced its 2023 full-year results. The annual report was due to be released a month ago. The reason given by Polestar for the delay was that it needed more time to complete the correction of the accounting errors for 2021 and 2022.
According to the financial report data, Polestar's car sales in 2023 will increase by 6% to 54,600 units, but revenue will fall by $67.3 million. The announcement said that the decline in performance was affected by the increase in discounts and the decline in sales of carbon emission allowances.
Polestar Cars' gross profit decreased by $513 million last year and its operating loss widened to $1.459 billion due to the impairment of Polestar 2 intangible assets, impairment of property, plant and equipment and inventory build-up.
In 2023, Polestar's gross profit margin on sales turned from positive to negative, falling to -17.44%, and its net loss increased from 481 million yuan in 2022 to 1.173 billion yuan. Based on this calculation, Polestar lost $21,500 per car sold last year, or about 150,000 yuan.
Due to Polestar's long-term losses and the need for its own electrification transformation, Volvo Cars has decided to stop "blood transfusion" to Polestar. In February, Volvo Cars announced that it would no longer provide further financial support to Polestar. Since then, Volvo Cars has transferred 62.7% of its approximately 48% stake in Polestar to Geely Sweden Holding, which has become the largest shareholder of Polestar.
2. Can Polestar avoid delisting?
As an emerging EV manufacturer, Polestar was hoping to leverage China's cheap EV industry chain and international brand influence to gain a foothold in overseas markets. However, the reality is not so rosy. Last year, Polestar lost 150,000 yuan per car sold, a staggering figure that raises concerns about its future. So why is Polestar in such a predicament? Can the fate of delisting be avoided?
First of all, Polestar was founded with a clear and visionary strategic vision: to create a premium EV brand for the global market by leveraging the low-cost supply chain provided by China, the world's largest EV market, combined with Volvo Cars' safety technology and Geely Holding Group's resources. This strategy aims to stand out in the highly competitive new energy vehicle market by integrating resources, rapidly expanding production scale and enhancing the brand's international influence. However, the reality is not as good as it should be. Despite its seemingly unique circumstances, Polestar encountered a number of challenges in implementing its globalization strategy. On the one hand, the overseas market is vast, but the competition is also fierce, especially in Europe and North America, where not only industry giants such as Tesla, but also many local and international brands compete for market share. On the other hand, Polestar tried to enter the market with a "premium" positioning, but failed to form enough differentiation in terms of brand recognition, product innovation and marketing, resulting in its brand influence not meeting expectations.
Secondly, after Polestar operated independently from Volvo, it failed to effectively inherit and strengthen its safety and quality genes derived from Volvo, but instead appeared ambiguous in brand building, neither fully inheriting the halo of the parent brand, nor establishing a unique brand image in the minds of consumers. This lack of brand power is directly reflected in the market performance – even with the launch of several models, such as the Polestar 2 and Polestar 4, there are few popular models, and sales are mediocre, resulting in economies of scale, further exacerbating financial pressures. More importantly, the construction of product strength has not met expectations. Although Polestar's models are innovative in design and technology, they do not have significant advantages in terms of range, intelligent experience or value for money, making it difficult to attract a large number of consumers. Especially in the price war triggered by Tesla's price cuts, Polestar failed to respond quickly to market changes and adjust its strategy to enhance its competitiveness.
Thirdly, Polestar's product line is relatively single, mainly relying on Polestar 2 and Polestar 4 to support the market, which is difficult to meet the diversified market needs and effectively expand market share. Especially in the context of the increasingly fragmented new energy vehicle market and the diversification of consumer demand, a single product line has become a bottleneck restricting the development of Polestar. In addition, the lack of a truly "explosive" model makes it difficult for Polestar to increase brand awareness and market share in a short period of time, forming a word-of-mouth effect.
Fourth, Polestar seems to be in a semi-abandoned state at the moment. Volvo's support for it has been limited, and its parent company, Geely, has not been able to meet expectations. Against this backdrop, Polestar is facing increasing financial pressure and operational difficulties. The lack of sufficient financial support and resources has made it difficult for Polestar to carry out large-scale market expansion and technology research and development, which further weakens its long-term development potential.
As a result, Polestar is facing a serious challenge, and in this rapidly changing era of new energy vehicles, the window of time left for Polestar is gradually narrowing, and whether it can achieve a turnaround is testing the management of Polestar Motors.