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Polestar, the electric carmaker backed by Volvo Cars and Geely Holding, announced a significant financial milestone on Wednesday, securing a substantial $950 million loan from a syndicate of banks.
This crucial funding injection comes in the wake of Volvo Cars’ decision to discontinue funding for Polestar, propelling Polestar’s shares on the New York Stock Exchange up by 18.5%.
In addition to the substantial loan, Polestar unveiled optimistic projections, aiming for double-digit gross profit margins by 2024, a marked improvement from the expected flat outcome in 2023.
CEO Thomas Ingenlath emphasized the importance of focusing on core car programs, highlighting the forthcoming releases of Polestar 2, 3, and 4 in 2024, with Polestar 5 set to join the lineup in 2025.
Despite Polestar’s advantageous financial backing from Volvo Cars and Geely Holding, the company has faced challenges, including target misses and workforce reductions.
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The funding report comes at a critical juncture following Volvo’s decision to halt further financial support for Polestar, transferring its stake to shareholders like Geely.
The three-year loan facility, secured from a consortium of 12 international banks, is integral to Polestar’s aspirations for achieving cash flow break-even by 2025.
With the automotive industry’s high development costs, estimated at $1 billion per model, this funding is vital for Polestar’s continued growth and product development.
Geely CEO Daniel Li reaffirmed the company’s unwavering support for Polestar, expressing confidence in its prospects.
Geely intends to maintain its stake in Polestar and provide ongoing operational and financial support, ensuring access to cutting-edge technologies and engineering expertise to fuel Polestar’s global expansion goals.
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