Polestar Automotive Holding UK Q1 Earnings Call Highlights

Key Points

• Polestar’s first-quarter vehicle deliveries rose 7% year over year to more than 13,100 cars, a record Q1 for the company, with Europe driving most of the growth. Management said the Polestar 4 launch is gaining traction in North America and other markets.
• Profitability worsened despite stable revenue, as revenue held at $633 million but gross margin fell to negative 3.2% and net loss widened to $383 million. The company blamed pricing pressure, tariffs, lower carbon credit sales and unfavorable vehicle mix.
• Polestar is pushing a major restructuring and regional manufacturing strategy to offset tariff pressure and improve efficiency. It also plans to expand to about 250 sales points by end-2026 and is awaiting debt-to-equity conversions from Geely Sweden and Volvo Cars to support liquidity.

Polestar Automotive Holding UK NASDAQ: PSNY reported higher first-quarter 2026 vehicle volumes but a wider loss, as management said pricing pressure, tariffs and seasonality offset cost-cutting efforts in a more difficult electric vehicle market.

Chief Executive Michael Lohscheller said Polestar delivered more than 13,100 cars in the quarter, up 7% year over year and a record first-quarter figure for the company. Europe accounted for 78% of total sales, with regional volumes up 11%. Lohscheller cited growth of 20% in the U.K., 35% in Germany and 17% in Sweden, while also pointing to strong performance in South Korea and Australia, where he said the Polestar 4 has been successful.

In the U.S., Lohscheller said the broader EV market has been affected by the removal of incentives, though he added that the Polestar 4 launch across North America has “started well” with strong media reviews and growing customer interest in Canada and the United States.

Revenue Holds Steady as Margins Come Under Pressure

Chief Financial Officer Jean-François Mady said first-quarter revenue was $633 million, broadly stable from a year earlier. He said higher volumes, led by the Polestar 4, and favorable foreign exchange from the appreciation of the pound sterling and euro against the U.S. dollar helped support revenue.

Those benefits were offset by pricing pressure, vehicle mix, lower carbon credit sales and tariff impacts, Mady said. Polestar 3 represented 9% of first-quarter volume, compared with 20% a year earlier, while Polestar 4 increased to 67% of volume from 49% a year earlier. Carbon credit sales totaled $21 million, down from $29 million in the prior-year quarter.

Mady said carbon credit sales are expected to follow a pattern similar to last year, with revenue weighted toward the second half of the year. He reiterated that Polestar expects 2026 carbon credit sales to be in line with 2025 for the full year.

Gross margin was negative 3.2%, and adjusted gross margin was negative 3.3%. Mady attributed the lower margin mainly to pricing pressure, EU and U.S. tariffs, lower carbon credit sales in the quarter and positive one-time impacts that had benefited the first quarter of 2025.

Polestar reported a net loss of $383 million, compared with a net loss of $166 million a year earlier. Mady said the wider loss was driven by factors affecting gross margin and foreign exchange impacts related to Chinese yuan movements on operating and financing liabilities. Adjusted EBITDA loss was $235 million, compared with an adjusted EBITDA loss of $96 million in the prior-year period.

Retail Expansion and Cost Reductions Remain Central to Strategy

Lohscheller said Polestar has accelerated a business model transformation that includes expanding retailer locations, moving toward a single group architecture, consolidating manufacturing into the regions where it operates and creating a leaner organization.

The company expects to end 2026 with about 250 sales points globally, up from 150 just over a year ago. In Germany, Polestar has changed its dealer setup and plans to grow from 12 sales points to 30 by 2027. Lohscheller said the company is shifting from smaller, city-center spaces toward full dealerships where customers can take test drives, buy new cars, access service and consider pre-owned vehicles.

Polestar has also reduced staffing by about 25% to approximately 1,700 employees, Lohscheller said. He said the company will continue seeking activity-based savings and working with partners on efficiencies in sourcing and manufacturing.

• First-quarter retail sales exceeded 13,100 cars, up 7% year over year.
• Revenue was $633 million, broadly stable from the prior-year period.
• Gross margin was negative 3.2%, while adjusted gross margin was negative 3.3%.
• Net loss widened to $383 million from $166 million a year earlier.
• Cash at the end of March 2026 was approximately $676 million.

Manufacturing Regionalization Cited as Tariff Mitigation

Lohscheller described regional manufacturing as “probably the most significant shift happening in the industry right now” and a key part of Polestar’s future strategy. He said the planned consolidation of Polestar 3 production in South Carolina from two factories to one will support efficiency efforts from the latter part of 2026.

For Polestar 4, Lohscheller said adding a new variant to be produced at the Busan, South Korea, factory should support further efficiency gains as volumes grow. He also highlighted the company’s decision to produce the Polestar 7 compact SUV in Europe.

Asked about tariffs during the question-and-answer session, Lohscheller said Polestar’s principal mitigation strategy is to manufacture regionally “where our customers are.” He cited the Volvo plant in South Carolina as an example for the U.S. market, along with regional strategies for Asia and the planned European production of Polestar 7.

Mady said the year-over-year gross margin comparison was affected by the fact that Polestar began 2025 with a high level of inventory that had already cleared customs, meaning newer tariff impacts were not reflected in first-quarter 2025 sales in the same way.

Liquidity and Outlook Discussion

Mady said Polestar was in compliance with all covenants at the end of the first quarter. The company ended March with about $676 million in cash. The change in cash position was driven by higher adjusted EBITDA loss, negative working capital movement and net repayment of financing facilities, partly offset by equity proceeds in the quarter.

Mady said inventory levels declined, but the positive impact was more than offset by cash outflows from settling payables. He also said Polestar expects to update the market on a planned debt-to-equity conversion by Geely Sweden of approximately $300 million later this quarter, followed by a second debt-to-equity conversion by Volvo Cars of approximately $65 million.

In response to an analyst question about capital runway and the path to free cash flow positivity, Mady said Polestar’s average cash burn in 2025 was $120 million and showed progress from 2024. He said the company is structurally improving through profitability gains, reduced EBITDA losses, working capital improvements and lower expected legacy capital expenditure cash outflows in 2026.

Asked about retail expansion and whether it could create upside to the company’s previously referenced low double-digit volume growth outlook for 2026, Lohscheller said the sales-point expansion and product lineup improvements were already embedded in the volume guidance given in February.

Lohscheller also highlighted Polestar’s product activity, saying global media test drives had begun for Polestar 5 and that journalist feedback confirmed the car’s positioning around design, performance and sustainability. He said the company’s “product offensive is in full swing,” with additional launches planned after the summer and early next year.

About Polestar Automotive Holding UK NASDAQ: PSNY

Polestar Automotive Holding UK PLC NASDAQ: PSNY is an electric performance car company specializing in the design, development and manufacture of premium electric vehicles. Established as an offshoot of Volvo Car Group’s high-performance Polestar division, the company focuses on delivering a blend of Scandinavian design, advanced electric powertrains and cutting-edge connectivity features.

The roots of Polestar date back to 1996 when it operated as Volvo’s in-house tuning and motorsport arm.

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