Polestar Automotive Holding UK NASDAQ: PSNY reported record retail sales for 2025 and highlighted progress on margin improvement, cost discipline, and liquidity as it prepares for an expanded product lineup over the next several years.
Record 2025 retail sales and early 2026 momentum
Chief Executive Officer Michael Lohscheller said 2025 marked a record year for Polestar retail sales, with “over 60,100 cars” delivered, in line with the company’s guidance for 30% to 35% growth. Lohscheller added that the company accelerated changes to its commercial strategy and footprint, calling them an “important foundation” for future growth and a path toward profitability.
Heading into 2026, Lohscheller said first-quarter retail sales totaled about 13,100 vehicles, a first-quarter record for the company and a year-over-year increase of 7%. He said Europe remained Polestar’s largest region, citing growth in key markets including the U.K. (up 20%), Sweden (up 17%), and Germany (up 35%). Lohscheller also pointed to strength in Australia and South Korea. In the U.S., he said policy changes have weighed on EV demand broadly, though he described the launch of Polestar 4 across North America as “off to a good start” with strong media reviews and customer feedback.
Network expansion and an evolving selling model
Lohscheller said Polestar expanded its retail footprint by 50% in 2025, growing from 140 to 210 retail sales points. He added the company expects to reach approximately 250 sales points by the end of 2026, which would represent about 20% growth versus the end of 2025.
CFO Jean-François Mady provided additional detail, saying Polestar operates in 28 countries and opened 71 new sales points and signed 54 new retailers in 2025, with most of the expansion occurring in Europe. He attributed growth to Polestar’s shift toward an active selling model and an expanded retail network supported by its three-model lineup.
Financial results: revenue growth, impairment-driven margin pressure, and improving adjusted profitability
Mady said 2025 revenue rose 50% year-over-year to “surpass $3 billion,” driven by higher volumes and favorable mix, including growth in Polestar 4. He said the increase included a $559 million volume effect and $271 million from higher revenue per vehicle due to mix, while also citing $181 million of higher carbon credit revenue under a new EU pool agreement. He said total carbon credit sales were $211 million, with $192 million booked in revenue and $19 million in other operating income. Mady said Polestar achieved its target for a “three-digit million-dollar amount” of carbon credit revenue in 2025 and expects a similar level in 2026.
Despite the revenue growth, Mady said reported gross margin for 2025 was -35% due to $1.1 billion of impairment expenses tied to Polestar 2, Polestar 3, and an internal development project that includes Polestar 5. He attributed the impairments to higher production costs stemming from regulation and policy changes and tariffs, pressure on pricing, slower demand in the upper premium EV segment, and competitive dynamics.
On an adjusted basis, however, Mady said profitability improved materially. Adjusted gross margin (excluding impairment and other unusual items) improved to -0.7% from -12.5% in 2024, helped by a higher share of Polestar 4, improved geographic mix, higher carbon credit revenue, and ongoing product cost reductions through commercial negotiations and “decontenting” initiatives.
For the fourth quarter, Mady said retail sales exceeded 15,600 vehicles, up 27% year-over-year, while revenue increased 54% to $887 million. He cited higher volume, a favorable model and channel mix, carbon credit sales of $88 million, lower residual value guarantee adjustments related to North America, and favorable foreign exchange, partially offset by pricing pressure.
Mady said fourth-quarter reported gross margin improved year-over-year by 109 percentage points but remained negative at -38%, primarily because impairment expenses fell to $340 million in the quarter from $622 million a year earlier. Adjusted gross margin for the quarter improved to +2% from -39% in the prior-year quarter, supported by mix (Polestar 4 represented 66% of the mix, with 84% of Polestar 4 sold in Europe), higher carbon credit sales, and lower residual value guarantee adjustments, partially offset by pricing pressure and higher duties and tariffs.
Fourth-quarter net loss was $799 million, which Mady said was a 32% improvement year-over-year, mainly due to lower impairment expenses. Adjusted EBITDA improved to -$223 million from -$470 million, driven by adjusted gross profit swinging to +$17 million from -$224 million in the prior-year quarter. For the full year, Mady said adjusted EBITDA loss was $783 million, narrowing 27% year-over-year.
Cost initiatives: headcount reduction and product cost actions
Mady said selling, general and administrative expenses improved by $34 million year-over-year. He attributed savings to a headcount reduction of almost 25%, optimized marketing and administrative spending, and broader cost discipline, producing about $100 million in savings (a 12% decrease). He said the savings were partially offset by higher sales agent remuneration of $65 million due to higher sales volumes. Research and development expense rose to $78 million from $38 million, driven by additional spending on new programs with a lower capitalization rate.
In response to an analyst question on ongoing cost initiatives, Mady said Polestar would continue to look for synergies and further product cost reductions. He pointed to Polestar 4 product cost reductions achieved in 2025 versus 2024 at “low double digits” year-over-year, including reductions in materials and batteries, and said the company intends to continue decontenting “while not compromising on the premium positioning.”
Liquidity, funding actions, and 2026 guidance
Polestar emphasized financing and capital structure improvements. Lohscheller said that starting in December 2025, the company raised $1 billion of new external equity through three equity financing rounds, supported by Geely Sweden Holdings, and announced agreements with Volvo Cars and Geely Sweden Holdings to convert about $640 million of shareholder loans to equity. Lohscheller said the conversions, once completed, are expected to reinforce liquidity and keep Volvo Cars’ ownership at about 19.9%.
Mady said Polestar secured $1.2 billion of new equity investment from existing investors and external financial institutions from June 2025 to March 2026, including $200 million raised in June 2025 from PSD Investment, an existing investor controlled by Geely Holding founder and chairman Li Shufu. He said that since December 2025, Polestar raised an additional $1 billion over three rounds at a share price of $19.34, expanding the shareholder base and increasing free float to over 40%.
Mady added that Volvo Cars had converted the first tranche of its shareholder loan, the maturity of the remaining balance was extended to December 2031, and Geely Sweden was expected to convert about $300 million later in the quarter. After that, he said Volvo Cars was expected to convert an additional $65 million to maintain a 19.9% stake.
On credit facilities, Mady said Polestar secured about $1.6 billion of new 12-month term facilities in 2025 and renewed about $3 billion of existing 12-month facilities. He said cash at the end of December 2025 was about $1.2 billion, and that Polestar exited the year in compliance with all covenants, with lenders agreeing to amend covenants for 2026.
Discussing cash burn, Mady said the average cash burn in 2025 was around $120 million, similar to 2024, while noting structural improvements such as a $300 million year-over-year reduction in adjusted EBITDA loss and a reduction in inventory of about 7,000 vehicles. He said higher receivables and other working capital factors offset some benefits, and that interest expense and investing cash outflows remained significant. Looking ahead, Mady said the company expects cash burn to improve in 2026, aided by better operating results and reduced interest burden following debt-to-equity conversions. Lohscheller added that the company’s strategy to rely more on Geely Group technologies and a “unique platform strategy” should help reduce future capital expenditures.
For 2026, Mady reiterated guidance for “low double-digit” retail sales growth, with progress through the year consistent with seasonality. He said mix is expected to continue shifting toward Polestar 4, and later in 2026 to include a new Polestar 4 variant.
In closing remarks and Q&A, Lohscheller also addressed trade uncertainty and autonomy. On tariffs and geopolitics, he said the company’s manufacturing footprint across North America, South Korea, and China provides flexibility, and he referenced plans to localize more production in Europe over the medium term, including Polestar 7 production at a European facility. On autonomy, he said Polestar expects progression through Levels 2 and 2+ “step by step,” citing partnerships such as Mobileye and access to technology through the Geely ecosystem.
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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