Polestar Automotive Holding UK Plc Q3 FY2023 earnings call

• Record deliveries in Q3 with 13,976 cars delivered, a 51% growth year-over-year.
• Polestar 2 model year 2024 deliveries ramping up with positive reviews.
• Polestar 3 preparations for production in China early 2024 and U.S. summer 2024, completed hot weather testing in UAE.
• Polestar 4 start of production next week, customer deliveries in China end of 2023, rest of world mid-2024.
• Strategic partnership with Google, integrating apps like Prime Video.
• Reworked business plan focusing on cost reduction, efficiency improvement, targeting cash flow breakeven in 2025.
• Focused market presence: shifting investments in Europe, JV in China with Meizu, improving U.S. business with Polestar 3 production in South Carolina.

In Q3 2023, Polestar delivered 13,976 cars, a 51% growth compared to the same period last year. Revenue reached $613 million, up 41% driven by volume growth and model year 2024 ramp-up. Gross profit for Q3 was approximately $4 million, corresponding to a margin of almost 1%, but was impacted by a $28 million inventory impairment charge due to weaker demand in certain markets like the U.S. and inventory buildup. Fleet sales reverted to around 60% of total sales this quarter, with retail making up 40%.

• Targeted total annual deliveries in 2025 to be around 155,000 to 165,000.
• Aim for cash flow breakeven in 2025.
• Target gross margins in the high teens in 2025, with more than half the progression from model range rollout of more luxurious cars.
• Need approximately $1.3 billion additional funding beyond existing and new support from major shareholders to reach cash flow breakeven in 2025.

• Macroeconomic and industry trends affecting EV adoption.
• Weaker demand in certain markets like the U.S. leading to inventory buildup and impairment charges.
• Geopolitical risks potentially affecting manufacturing and trade, such as protectionist policies in Europe.