AUTO

Polestar Introduces Polestar 5 and 7 to Strengthen Its Market Position

January 16, 2025

Revenue dropped 21 percent to $1.47 billion in the first nine months of 2024 due to lower Polestar 2 sales and delayed launches of new models.
The gross margin fell to -2.4 percent, impacted by discounts and changes in cost accounting for the Polestar 2.
Polestar secured over $800 million in new loans and is finalizing an additional $400 million facility to manage cash flow and operations.
The Polestar 5 and Polestar 7 will strengthen the lineup in 2025, with the Polestar 7 produced in Europe.

Polestar is navigating what CEO Michael Lohscheller called a “transitional year” in 2024. With competition in the electric vehicle (EV) market growing and global demand falling short of earlier projections, the company is fine-tuning its approach to strengthen its position.

Despite these challenges, Polestar’s leadership remains optimistic, playing up its strategy, diverse product lineup, and operational adjustments as key elements in building its identity as a premium EV brand.

Polestar 2 and 3 at Electrify Expo Seattle — _{Polestar lineup displayed at Electrify Expo.}

Polestar Faces Revenue Drop in 2024 with Focus on Recovery

The numbers from Polestar’s recently released preliminary Q3 and nine-month 2024 financial results reflect a challenging year. Revenue for the nine months ending September 30, 2024, declined by 21% to $1.47 billion, down from $1.85 billion in 2023.

Gross margin also fell to -2.4%, driven by increased discounts for the Polestar 2 and the delayed ramp-up of newer models, such as the Polestar 3 and Polestar 4. Adjusted EBITDA, however, improved by 11%, signaling effective cost-cutting measures.

Polestar’s cash balance dropped by nearly half, from $951 million in 2023 to $501 million in 2024. This decline stems from a negative operating cash flow and investment activities. In response, Polestar secured over $800 million in 12-month term facilities in December 2024 and is finalizing an additional $400 million facility. Roughly 25% of these proceeds will go toward repaying existing loans, while the rest will bolster working capital.

Discussing the financial landscape in a live presentation on YouTube, Lohscheller pointed out the company’s commitment to improving cost efficiency and operational effectiveness. “We have clear milestones in terms of financial performance,” he said. “We target for 2025 a positive adjusted EBITDA, which will then improve in 2026. By 2027, we aim for positive free cash flow after investments.”

Polestar Expands Lineup with Polestar 5 and Polestar 7

Polestar’s product portfolio, which currently includes the Polestar 2, 3, and 4, is central to its strategy. Over 170,000 units of the Polestar 2 have been sold globally, highlighting its importance to the brand. Lohscheller described the Polestar 2 as “the basis of the brand,” adding that its success has laid a strong foundation for future models.

The Polestar lineup will expand with the Polestar 5 and Polestar 7. The Polestar 5, a four-seat grand tourer, is expected to launch in the second half of 2025. This model will feature an in-house-developed bonded-aluminum structure and advanced 800-volt technology, designed to deliver exceptional performance and efficiency.

Meanwhile, the Polestar 7 will enter the compact SUV market, one of the fastest-growing automotive segments. This vehicle will be produced in Europe, aligning with Polestar’s strategy to manufacture vehicles closer to key markets, reducing complexity and supporting local economies.

Philipp Römers, Polestar’s new Head of Design, hinted at the distinctiveness of the Polestar 7. “Every Polestar has a unique selling proposition,” Römers explained. “We will make sure that the Polestar 7 will have a strong USP.”

Polestar Expands Retail Presence and Focuses on Growth in France

Polestar is refining how it connects with customers, moving from a direct-to-consumer approach to one that includes active selling through retail partners. This change has led to a noticeable increase in the company’s retail presence.

In Europe, locations grew from 70 to 130, while North American sites expanded from 36 to 57. These efforts are yielding positive results, as retail sales in Q4 2024 rose by 5.3%, with order intake climbing an impressive 37.2% compared to the same period last year.

France, one of Europe’s largest EV markets, will be the focal point of Polestar’s expansion in 2025, with Eastern Europe, Asia, and Latin America to follow from 2026 onward. “2025 is all about France,” Lohscheller said. “We want to capture this potential with a competent management team, strong retail partnerships, and well-suited car lines.”

Polestar Advances Sustainability with EV Innovation and Cost-Saving Solutions

Sustainability is deeply embedded in Polestar’s philosophy. The Polestar 4 has already been recognized as the most sustainable EV in the UK, showcasing the company’s commitment to reducing environmental impact.

Polestar has also introduced Polestar Energy, a smart home charging service designed to help customers lower their charging costs by up to 30%. This service is expected to roll out in additional markets in 2025, making it an attractive option for more EV owners.

Another key revenue stream is the sale of CO2 credits, which Lohscheller described as a financial and environmental opportunity. “These credits represent the good work Polestar has done in terms of selling zero-emission mobility,” he said. The company expects CO2 credit sales to generate three-digit million-dollar revenue annually starting in 2025.

Polestar Eyes Growth and Stronger 2025

Despite the hurdles of 2024, Polestar is optimistic about its trajectory. The company projects compound annual retail sales growth of 30-35% from 2025 to 2027 and anticipates a strong start to 2025, thanks to increasing order volumes for the Polestar 3 and Polestar 4.

Lohscheller expressed his optimism for the company’s future, highlighting the progress being made across critical areas. “With the right cars, the right distribution, and a much better focus on cost reduction, 2025 will be the strongest year in Polestar’s history.”