Polestar Unveils the Polestar 7 SUV Amid Declining Sales and Regulatory Challenges.
The electric vehicle manufacturer provided an update on its business activities, without mentioning its regulatory issues in the United States.
Polestar, the Swedish manufacturer originally from China, faces the possibility of a ban in the United States, but this will not halt its progress in launching new products. In a business update presented on Thursday, the company revealed its new model, the Polestar 7, a compact SUV that will be manufactured in Europe. Although few details were provided about this new vehicle and no prototype was presented, the manufacturer emphasized that it will be a "very progressive SUV" with a "strong USP" or unique selling proposition. There is still no clarity on the start date for production or the specific location of its manufacturing in Europe, although Sweden appears to be a likely option.
Michael Lohscheller, the new CEO of the company, mentioned that the company will enter the compact SUV segment, which is currently the largest and fastest-growing globally, assuring that the model will incorporate all of Polestar's DNA. The update was offered in a professional interview format with Lohscheller, without mentioning the regulatory complications Polestar faces in the United States. The Biden administration recently implemented a ban on connected vehicle software coming from China, an action that Polestar has indicated would "effectively prohibit" the sale of electric vehicles in the country. In fact, the term "United States" was not mentioned during the 27-minute interview, which could reflect the obstacles that electric vehicles are facing under a possible Trump administration.
Instead, the company announced that it expects a forthcoming launch in France, one of the fastest-growing markets for electric vehicles, marking a significant shift in its focus compared to previous years. Polestar had been focused on the U.S. market with the Polestar 3, a two-row SUV produced at its South Carolina factory to qualify for generous incentives under the Biden administration. However, sales have decreased due to high prices, charging challenges, and politics, with forecasts suggesting many incentives implemented by Biden may be eliminated under a future Trump presidency.
In a statement, Polestar reported that it is adapting its operations to comply with new regulations. Michael Ofiara, the brand's spokesperson, stated that the United States will remain a key market for Polestar, ensuring that its vehicles will comply with regulations in every country where they operate. The final legislation is expected to begin implementation starting with the 2027 model year, and the company is in advanced stages of adapting its future models to ensure they fit these regulations.
Furthermore, Polestar reported its third-quarter earnings, revealing a net loss of $323 million, with 12,548 cars sold, representing an 8 percent decrease compared to the third quarter of 2022. The company also warned that it does not anticipate similar revenue levels in 2024 compared to 2023, nor a positive gross profit margin for the fourth quarter. Instead, it expects "a mid-percentage revenue decline" and a gross profit margin similar to that of the entire year of 2023, affected by lower-than-expected sales of the Polestar 3 and Polestar 4 models.
Despite these challenges, Lohscheller expressed optimism about the company's future, anticipating positive adjusted earnings for 2025 and free cash flow in 2027, warning that "2024 will really be a transition year for Polestar." According to Lohscheller, who previously served as CEO of Opel, the company is well-positioned for 2025, with the right models, efficient distribution, and a clear focus on cost reduction and efficiency improvement.
