Polestar Reports Strong Q2 Profit Margin Amid Leadership Changes

By Marie Mannes and Akash Sriram

STOCKHOLM (Reuters) – Luxury EV maker Polestar (NASDAQ: PSNY) on Thursday reported a second-quarter gross profit margin that exceeded analyst expectations and announced securing additional funding, leading to a share price increase of over 20%.

The rise in shares followed a previous decline when the Swedish company caught the market off guard with the announcement of a CEO replacement after facing months of challenges, including decreased demand, new tariffs, and delayed car launches.

Like its competitors, Polestar requires funds to expand its business, aiming for profitability and cash flow breakeven by 2025.

Earlier this year, Polestar obtained a $950 million loan from a banking syndicate. On Thursday, it disclosed an additional $300 million loan from one of the banks, achieving its target of $1.3 billion in external funding.

The share price peaked at $1.15 on Thursday, an increase of over 21%, although it remains down more than 50% year-to-date.

Cantor Fitzgerald analyst Andres Sheppard noted the capital injection as significant progress, highlighting that Polestar’s gross margin posted a negative 0.7% for the three months ending in June, compared to a positive 0.1% from a year prior. This was much better than analysts’ expectations of a negative 6-7%.

Sheppard commented, “The business is nowhere near being fully funded, but it’s encouraging that they are moving to be.”

During an analyst call that the departing CEO did not attend, Finance Chief Per Ansgar mentioned that Polestar is looking for an equity injection and is focused on reducing costs. He emphasized the goal to achieve a double-digit gross margin by the year’s end.

Thomas Ingenlath was replaced as CEO by Michael Lohscheller, former head of Opel, as the company seeks to expand further and address the challenges faced by EV startups due to slower demand growth and high borrowing costs driving consumers to cheaper gasoline-electric hybrids.

Sheppard remarked that Lohscheller’s extensive automotive experience, particularly in scaling businesses, is vital for Polestar’s needs.

Polestar’s need for financing intensified in February when co-founder Volvo Cars announced it would cease further funding. However, majority shareholder and co-founder Geely from China has committed to continuing support.

Polestar has launched two new models this year: the SUVs 3 and 4, which began deliveries earlier in the year, while most of its current sales come from the original Polestar 2.