"Where have all the EV buyers gone?" asks Volvo's Polestar, as profit is down by 63%

Apart from Tesla, it seems almost impossible for anyone to make money as a pure-play EV manufacturer. Remember that BYD still relies on PHEVs, which have combustion engines, to contribute nearly half of its sales, so we can’t refer to BYD as a pure-play EV manufacturer. Volvo’s EV-only Polestar brand is the latest casualty in the brutal EV space, as gross profit for January to September 2023 is down 63 percent.

Gross profit decreased USD 36.3 million, or down 63 percent to 21.2 million US dollars. Polestar says the poorer performance is due to higher contract manufacturing, warranty, and freight costs, irregular supplier charges related to batteries and semiconductors, and increased inventory impairment. 

Polestar lost 735 million US Dollars through the first nine months of 2023, though the figure is 32 percent lower than the same nine-month period last year.

The Geely- and Volvo-funded pureplay EV manufacturer has revised its sales forecast for the year downwards to 60,000 units, or 20,000 units less than its May forecast of 80,000 units.

Also trimmed downwards is its gross margin, down by half, to just 2 percent. For reference, Tesla’s profit margin as of September 2023, is slightly under 8 percent, following the brutal price war in the EV space.

Against all predictions, Toyota – which has been contend to watch EV development from the fringes rather than jumping in with both feet – has grown its margins to nearly 12 percent, buoyed by what the company describes as ‘strong earning power’ of its hybrid models.

Polestar’s CEO Thomas Ingenlath said the company targets to break even by 2025. “By having taken the necessary steps to re-work our business plan, we are reducing costs and improving efficiencies to create a more resilient and profitable Polestar – and reducing our funding need at the same time.

“Achieving cash flow break-even already in 2025 will show the strength of our asset-light business model. Margin over volume is our way forward, supported by a gorgeous line-up of four exclusive performance cars.”

Reducing reliance on China, contract manufacturing by Renault in Korea

In a related development, Ingenlath also confirmed that it has appointed Renault Korea Motors (RKM) to contract manufacture the Polestar 4 at its Busan plant. The Busan plant will work in parallel with Geely's Cixi plant in Hangzhou, which will manufacture the Polestar 4 alongside other Lynk & Co and Zeekr models.

The Polestar 4 is an SUV-coupe positioned between the Polestar 2 sedan and the Polestar 3 SUV.

Geely owns 34 percent of Renault Korea Motors, formerly known as Renault Samsung Motors.

Thomas Ingenlath, Polestar CEO, says: “We’re very happy to take the next step in diversifying our manufacturing footprint together with Geely Holding and Renault Korea Motors, a company that shares our focus on quality and sustainability. With Polestar 3 on-track to start production in Chengdu, China in early 2024 and in South Carolina, USA, in the summer of 2024, we will soon have manufacturing operations in five factories, across three countries, supporting our global growth ambitions.”

Stéphane Deblaise, CEO of Renault Korea Motors, says: “Polestar 4 will be the first full battery electric vehicle produced in the Busan plant, symbolising Renault Korea Motors renewal and our ambitious vision for the future. We are very proud of this new partnership and grateful to the Polestar brand for their trust.

“From a wider perspective, we see further opportunities for Renault Korea Motors in the near future, thanks to our strong shareholders, Renault Group and Geely Group.”

Since Korea has free-trade agreement with USA, the Korea-built Polestar 4 won’t face the restrictions in the US that are applied on China-made EVs.

Despite the similar looks, the Polestar 4 rides on a different platform, the CEVT-developed Sustainable Experience Architecture (SEA) shared with the Volvo EM90, as opposed to the Polestar 3's Volvo-developed SPA2 platform. The latter also underpins the Volvo EX90.

The different platform is also why the Polestar 4 cannot yet be built at Volvo’s South Carolina plant, which will build the SPA2 platform EX90.