Polestar Curbs Expansion in Some Markets as Premium BEV Sales SlowPolestar Curbs Expansion in Some Markets as Premium BEV Sales Slow

Struggling battery-electric-vehicle manufacturer Polestar launches a new business strategy in a drive to return to profitability by cutting costs and delaying expansion of sales in some existing markets.

The Geely-owned company is suffering a sales slump as a result of the global decline of sales for expensive premium BEVs worsened by price discounts from rivals such as Volkswagen and Tesla.

Polestar’s new CEO, Michael Lohscheller, announces a strategic review, saying the company expects positive free cash flow after investments in 2027, two years later than an original forecast.

The automaker now expects a double-digit decline and negative gross margin and has secured extra funding of more than $800 million, part of which will be used to repay old debts. This new funding will take the company's current debt to about $4.4 billion, it said.

It is also working to secure an additional 12-month loan of $400 million that is expected to be available to the company later this month.

Its new strategy will refocus sales on growth markets, such as France, which it says will begin in earnest this year.

Polestar says France is one of the largest and fastest growing BEV markets in Europe and a natural fit for a premium brand like Polestar. Additional expansion across Eastern Europe, Asia and Latin America is planned starting in 2026.

European Union tariffs on BEVs made in China sees the automaker moving much of its production to other global production sites in the U.S., South Korea and Europe.

Its product range will be boosted this year with the launch of the Polestar 5, the performance 4-seat grand tourer based on Polestar’s in-house bonded-aluminum platform. It will also be the first Polestar model to use 800V technology.

This will be joined by the Polestar 7, a premium compact SUV targeting the current sales growth in that segment.

Polestar 7 will be manufactured in Europe and will be the first of a range of models moved away from a multi-platform approach to a single architecture, reducing complexity, costs and investments.

One current European silver lining it that the brand is among the BEV makers benefiting from CO2 credits being bought by other manufacturers unable to hit the BEV sales targets being mandated by the EU and the U.K.

Polestar says the demand for these credits is expected to increase to hundreds of millions of dollars per year, assuming governments do not relax the targets ^{to save legacy automakers}. Polestar has already created an EU CO2 pool with four automakers for 2025.

The company also is launching Polestar Energy in several key markets in Europe where vehicle bidirectional charging capabilities can reduce consumers’ home charging costs by up to 30%. The app-based service will be launched in several additional markets during the second half of the year.

Announcing the new strategy, Lohscheller, says: “We are building on the strong Polestar brand with design and performance at its core. But significant changes are needed to make this well-respected progressive brand a successful and viable business.

"We are speeding up our retail expansion and commercial transformation, whilst adjusting our future model lineup and significantly reducing our cost base. Both in terms of volumes and financials, we expect 2025 to be the strongest year in Polestar’s history.”