Polestar, the Swedish electric car brand, has secured $950M (approximately €878.73M) in external funding from 12 international banks, including BNP Paribas, Natixis, Standard Chartered, BBVA, HSBC, and SPDB.
Polestar will use the funds to finance its upcoming development stage, effectively covering a substantial portion of its estimated financial needs for this phase. As of December 31, 2023, the company’s balance sheet reflects approximately $770M in cash.
The funding comes in the form of a three-year loan facility, supporting Polestar’s business plan and helping it achieve its 2025 targets.
Daniel Li, Geely Holding Group CEO and Polestar Board Member, says, “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 Holding to realise its global growth targets.”
Thomas Ingenlath, Polestar CEO, adds, “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 break-even targeted in 2025.”
Brief about Polestar
Founded in 2017 by Volvo Cars and Zhejiang Geely Holding, Polestar aims to accelerate the shift to sustainable mobility through design and technology.
With the latest funding, Geely Sweden Holdings will become the second-largest shareholder, and Volvo Cars aims to retain an 18 per cent stake in the company.
Available online in 27 global markets across North America, Europe and Asia Pacific, Polestar focuses on innovation for positive societal impact.
The company looks to introduce five performance electric vehicles by 2026. The Polestar 2, an electric fastback, launched in 2019, followed by the Polestar 3, an electric SUV, in late 2022.
The phased launch of the Polestar 4, a transformed SUV coupé, is ongoing through 2023 and into 2024. Upcoming models include the Polestar 5, an electric four-door GT, and the Polestar 6, an electric roadster.
Polestar 0 project aims to achieve a climate-neutral production car by 2030, fostering urgency in addressing the climate crisis.
The research initiative also aims to create a sense of urgency to act on the climate crisis, by challenging employees, suppliers and the wider automotive industry, to drive towards zero.
Polestar’s 2025 targets
In addition to the funding, Polestar is implementing a comprehensive efficiency programme. This includes a reduction of 10 per cent of jobs since mid-2023, with an additional 15 per cent reduction planned for this year.
Despite these measures, Polestar claims to have made strides in its strengthened business plan and 2025 targets, which include achieving cash flow break-even, attaining an annual volume surpassing 155,000 units, and reaching a gross margin in the high teens.
While implementing cost-cutting measures, Polestar has expanded its model range by introducing two high-margin SUVs. The Polestar 4 is experiencing accelerated sales globally, and the production of the Polestar 3 has commenced in China, with successful test production runs in South Carolina, US.
Furthermore, the prototype production of the Polestar 5 is set to accelerate in 2024.
Polestar CEO Ingenlath, says, “This marks a new phase in Polestar’s business. 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.”
Polestar anticipates year-end volume growth aligning with its 2025 target, alongside a double-digit gross profit margin. Progress is expected to peak in the second half of 2024, driven by full production and the global distribution of its two SUV models.
