Polestar Automotive Holding UK PLC Q2 FY2025 earnings call

• Polestar's strong brand focus on design, performance, and sustainability is highlighted, with products like Polestar 4 winning awards, Polestar 3 setting a Guinness World Record, and Polestar 5 set to launch in September. - Operational improvements include growing sales points excluding China by 40% to 169, launching in new markets like France, and optimizing marketing and administrative costs. - Financial results show revenue growth, but gross margin was negative due to impairment expenses related to production costs and pricing pressure, though adjusted gross margin improved excluding impairments. - Focus on driving growth through active selling model, improving processes and efficiency, cutting costs, and protecting cash with new equity funding.

Polestar's revenue grew by 56% to $1.4 billion in the first half of 2025, driven by higher sales volume and a growing share of higher-priced models like Polestar 3 and Polestar 4. Retail sales volume increased by 51% to over 30,000 cars. Polestar 3 and 4 made up well over 50% of the volume. Carbon credit sales amounted to $90 million. The adjusted gross margin, excluding impairment expense, improved to a positive 1.4% from a negative 2.6% a year ago. Europe is the main regional market, with 77% of sales in Europe and 8% in the U.S.

Management will not be issuing financial guidance at this time but reiterates the target compound annual retail sales volume growth of 30% to 35% over 2025 and 2027.

• Geopolitical and market challenges impacting performance. - Tariffs on parts increasing production costs and affecting Polestar 3's volume and profitability. - Pricing pressure in the market. - Uncertainty in the U.S. market due to tax credit changes and policy shifts.

Q: Winnie Dong asked about demand environment quarter-to-date and margin decline breakdown.

A: Michael Lohscheller noted growing BEV markets in Europe but uncertainty in the U.S. Jean-Francois Mady explained margin decline was due to car line and channel mix, pricing pressure, tariffs, and inventory net realizable value assessment.

Q: Tobias Beith inquired about potential reimbursements to contract manufacturing partners and brand independence from Geely/Volvo.

A: Michael Lohscheller said they have long-term agreements with partners and Polestar has a strong brand with separate showrooms and little overlap with Volvo.

Q: Andres Sheppard-Slinger asked about liquidity, cash burn, and Polestar 5's impact.

A: Jean-Francois Mady discussed liquidity, cash burn in H1, and Polestar 5 being a brand halo with limited volume impact.

Q: Dan Levy asked about U.S. presence, strategy after EV tax credit, and EBITDA breakeven.

A: Michael Lohscheller mentioned U.S. exposure is 8% of sales, focus on Europe, and Jean-Francois Mady said they're working on a new business plan for EBITDA breakeven.