Polestar, a subsidiary of Geely, is facing challenges in gaining market share within the electric vehicle industry. These difficulties are attributed to software delays and fierce competition from companies like Tesla, which offer battery-powered vehicles at more competitive price points. To address these issues, Polestar is in the process of raising additional capital, potentially up to $1 billion, as disclosed in a recent Securities and Exchange Commission filing. This strategic move will allow the company to gradually sell various types of shares over an extended period.
Owned jointly by Volvo Car and the private investment company of Chinese billionaire Li Shufu, Polestar’s struggle for market share has intensified due to software-related setbacks and the strong market presence of Tesla, as well as other Chinese manufacturers offering lower-priced electric models. In the second quarter, the company reported a significant loss of $304 million, leading to concerns about its financial stability and share value. While Polestar initially set ambitious targets, aiming to sell 124,000 cars by this year, it has scaled back its expectations and reduced its full-year delivery target to as much as 70,000 units, down from the previous 80,000. These revised figures are based on its current lineup, with the Polestar 2 being the sole model available for consumers.
Polestar’s manufacturing operations are primarily based in China, with plans to expand production to Volvo’s U.S. factory near Charleston, South Carolina, for the production of the Polestar 3. However, software issues have led to delays in the release of this model, as well as its sibling, the EX90 premium large electric SUV. These challenges have put additional strain on the company’s growth and market competitiveness.