Polestar secures NZ$1.5b funding

Twelve international banks are providing Polestar with a total NZ1.5 billion (US$950 million) as a three-year loan to fund Polestar’s development.

Polestar says the deal provides the funds it requires to finance the next stage of its development and covers a large majority of its estimated financing needs.

It had about NZ$1.2 billion (US$770 million) cash at December 31, 2023, and says parent company Geely Sweden Holdings intends to participate in future financing activities when required.

Polestar says it is making strong progress on its strengthened business plan and achieving its 2025 targets, with a richer product mix and the global roll-out of two new SUVs to drive significant volume and profit margin progression in the second half of the year.

“Securing funding from a syndicate of global banks reflects our partners’ support for Polestar’s growth course,” says Polestar chief executive Thomas Ingenlath.

 “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.

Polestar board member and Geely Holding Group chief executive Daniel Li says that as a strategic partner and direct shareholder in Polestar Geely will continue to provide full operational and financial support to the performance car brand. 

“We will retain our shares in Polestar and intend to participate in future financing activities when required,” Li says.

“Polestar will have full access to technologies and engineering expertise from Geely Holding to realise its global growth targets.”

 The financing will be accompanied by a comprehensive efficiency program from Polestar.

Among other measures, 10% of jobs have been cut since mid-2023 with a further 15% to follow this year, Polestar says, adding annual volume of more than 155,000 units and a gross margin in the high teens are expected in 2025.

Polestar 4 sales are accelerating around the world, Polestar 3 has begun production in China, and prototype production of the Polestar 5 performance GT will also accelerate in 2024, Polestar says.

 It says a recently announced new shareholder structure in Polestar provides a solid basis for the brand’s further business development (click here for more)

“Under the new structure, Geely Sweden Holdings will become the second largest shareholder and Volvo Cars intends to retain an 18% stake,” says Polestar.

 “This marks a new phase in Polestar’s business,” says Ingenlath.

“The efforts of recent years are paying off.

“We improved our cost basis, secured financing and are ramping up our product offensive,” he says.

“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.”

At the end of this year Polestar expects volume growth that supports the 2025 volume target and a double-digit gross profit margin.

Volume and margin progression are expected to be weighted towards the second half of 2024, as the two SUVs reach full production and global distribution.

Publication of full-year 2023 results is planned later and a conference call replay of a February 29 webcast on the company’s business and outlook update is available here.