Due to the increase in tariff barriers and the intensified price pressure faced by electric car manufacturers, Polestar is further reducing costs after expanding losses in the first quarter.
Polestar (PSNY.US) is further cutting costs due to the increase in tariff barriers and the intensified price pressure faced by electric car manufacturers after expanding losses in the first quarter, according to the report from Finance and Economics APP.
Data shows that the company's operating losses in the three months ending in March were $232 million, an increase of 5% year-on-year.
The company, headquartered in Gothenburg, was once a pioneer in the electric car wave, but since being spun off from Volvo two years ago, its market cap has shrunk by nearly 95%. Polestar has been trying to solve its cash burn problem in the face of lower-than-expected sales.
After two rounds of layoffs (10% in 2023 and another 15% later), Polestar said on Tuesday that it is adjusting its business plan, which will include "additional relief measures." A spokesperson said these measures will include lowering costs throughout the supply chain rather than further layoffs, with the goal of achieving cash flow breakeven by the end of 2025.
In terms of sales, the company delivered about 7,200 cars in the first quarter and more than 12,000 in the following three months, an increase of 80% year-on-year. CEO Thomas Ingenlath said the company plans to enter seven new markets by 2025, which will be its key growth driver.
The company previously stated that its two new SUVs, Polestar 3 and 4, will help increase sales to more than 155,000 vehicles next year.
Currently, most of Polestar's cars are produced in China. The company said it will start producing the Polestar 3 SUV in South Carolina this summer after raising tariffs on Chinese-made electric cars in several key areas where geopolitical tensions have intensified.
Currently, the U.S. imposes a 100% import tariff on Polestar cars imported into the country, while the EU will officially impose a temporary tariff of up to 48% this week. The company will start producing the Polestar 4 Premium Sport SUV in South Korea in the second half of 2025.
The company said that customer delivery would not be delayed because of the tariff issue and that the Polestar 4 cannot be produced anywhere else.
In addition, Polestar emphasized that it is diversifying its manufacturing footprint and mitigating the impact of tariffs. The company expects a significant improvement in revenue in the second quarter and is confident in its business performance in the second half of the year.
After the earnings report was released, as of the time of writing, Polestar's stock price fell by about 8% pre-market.