Polestar Automotive Holding UK PLC Q2 FY2025 earnings call

• Polestar's brand focuses on design, performance, and sustainability. Products like Polestar 4 won awards, Polestar 3 set a Guinness World Record, and Polestar Charge offers access to over 1 million charge points in Europe. • Polestar 5 launch on September 8 at IAA in Munich, Polestar 7 to be manufactured in Kosice, Slovakia with Volvo Cars starting in 2028. • Commercial operations: grew number of sales points excluding China by 40% to 169, launched in France in June with all 3 models available. • Financial results: revenue up 56% to $1.4 billion, adjusted gross margin improved excluding impairment, adjusted EBITDA loss narrowed by 30%. • Operational improvements: optimized marketing spend, reduced administrative costs, continued product cost reduction.

Retail sales volume in the first half of 2025 grew by 51% to over 30,000 cars, ahead of the 30%-35% growth target for 2025-2027. Polestar 3 and Polestar 4 made up well over 50% of the volume. Revenue increased by 56% to $1.4 billion, driven by higher sales volume and a growing share of higher-priced Polestar 3 and Polestar 4 models. Europe is the main regional market, with strong performances in the U.K., Germany, Belgium, Nordic region, and APAC (South Korea). Carbon credit sales amounted to $90 million, with $72 million booked in revenue and $80 million in other operating income. The adjusted gross margin, excluding impairment expense, improved to a positive 1.4% in H1 2025 from a negative 2.6% a year ago.

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 profitability. • Tariffs and mounting pricing pressure affecting Polestar 3's volume and profitability. • Uncertainty in the U.S. market due to tariffs and policy changes. • Impact of external factors on cash position and overall financial performance.

Q: Comment on demand environment quarter-to-date and bridge from Q1 to Q2 adjusted gross margin.

A: Michael notes BEV markets still growing in Europe but shifts in segments; Jean-Francois explains margin decline due to car line and channel mix, pricing pressure, tariffs, and inventory assessment.

Q: Quantify potential reimbursements to contract manufacturing partners.

A: Michael states they have long-term agreements with partners and work through changes but don't provide specific figures.

Q: How to establish brand independence from Geely and Volvo?

A: Michael says Polestar has separate showrooms, strong brand differentiation, and incremental business for dealers, with products like Polestar 5 as brand halo.

Q: Liquidity, cash burn, and impact of Polestar 5 on ASPs and margins.

A: Jean-Francois mentions cash at $719 million, working capital improvement but higher cash use in H2 for investing; Michael says Polestar 5 is a brand shaper, not volume model, with positive margins but limited volume impact.

Q: U.S. presence and path to EBITDA breakeven.

A: Michael notes 8% U.S. exposure, focus on Europe; Jean-Francois says working on new business plan and assessing external headwinds to determine path to EBITDA breakeven.