Polestar may face a possible ban in the US, but the Swedish-via-China manufacturer won't let that stop it from launching new products. The company provided a business update on Thursday, during which it announced a new model, the Polestar 7 compact SUV, which will be produced in Europe.
Little was revealed about the Polestar 7 (we didn't even get to see a prototype), but the company said it will be a “very progressive SUV” with “a strong USP” or unique selling point. It is unclear when the vehicle will go into production or even where in Europe it will be built. (Sweden seems a likely bet).
“We will enter the compact SUV segment, by the way, the largest and fastest growing segment in the world, and we will obviously make sure that it comes with all the Polestar DNA,” said the company's new CEO, Michael Lohscheller.
“Obviously we will make sure it comes with all the Polestar DNA”
The update, which took the form of a professionally produced interview with Lohscheller, did not address Polestar's regulatory issues in the U.S. The Biden administration recently finalized a ban on connected vehicle software from China, a move that Polestar said would It would “effectively prohibit” it from selling electric vehicles in the United States.
In fact, the United States was not mentioned at all during the 27-minute video, perhaps a reflection of the strong headwinds electric vehicles face under the incoming Trump administration. Instead, the company said it hopes to launch it soon in France, which is one of the fastest-growing electric vehicle markets.
This represents a significant change in the company's position compared to recent years. Polestar focused on the US market with the Polestar 3, a three-row SUV built at its South Carolina factory to qualify for generous incentives under the Biden administration. Electric vehicle sales seemed strong when the Polestar 3 was announced, but now sales have slowed thanks to high prices, charging challenges and politics. Many of those incentives put in place by President Joe Biden are likely to be eliminated under President-elect Donald Trump.
Polestar also reported its third quarter results today (the company lags behind other companies in reporting its earnings), including a net loss of $323 million. It sold 12,548 cars, down 8 percent from its third-quarter 2023 sales.
The company also said it no longer expects similar revenue in 2024 to what it achieved in 2023, nor a positive gross profit margin for the fourth quarter. Instead, Polestar expects “a percentage decline in revenue of approximately 10% and negative gross margin at approximately the same level as full year 2023, as the fourth quarter product mix was negatively impacted by fewer Polestar sales.” 3 and Polestar 4 than expected.
But amid these challenges, Lohscheller said he was convinced Polestar was still on the right path. It predicted “positive” adjusted earnings for 2025 and free cash flow, in which Polestar would generate more money from its business operations than it would lose in 2027.
“Really, 2024 is a transition year for Polestar,” said Lohscheller, who previously served as CEO of Stellantis-owned Opel. “But I think we are now well positioned going into 2025 with the right cars, with the right distribution and obviously with a much better focus on significantly reducing costs and increasing efficiency.”
