Swedish EV maker Polestar (PSNY) said it expects to hit the lower end of its 2023 delivery target on Wednesday. Despite the lower expectations, Polestar says new EV launches will drive up demand. Its first electric SUV coupe, the Polestar 4, begins production next week.
Polestar delivered 13,976 vehicles in the third quarter, up 51% year-over-year. However, the number is down from 15,800 in the second quarter.
The YOY growth comes amid the Polestar 2 rollout, including the recently launched upgraded 2024 model.
Polestar expects the higher-priced model to help improve models going into the end of the year. Although higher deliveries pushed revenue up to $367.7 million (+25%) in Q3, increased costs led to gross profits slipping 63% to $36.3 million.
Higher expenses in the quarter led to an operating loss of $261 million, up 33% compared to last year. Meanwhile, gross profits fell to 3.6% from 4.1% last year.
Polestar expects to hit the lower end of its 2023 delivery target with around 60,000 vehicles. The EV maker had already slashed its target in May from 80,000 to between 60,000-70,000.
Due to the lower delivery expectations, Polestar says gross margins will be around 2% for the year, down from 4%.
The company said it was cutting costs to improve efficiency. Polestar had $951.1 million in cash at the end of September. However, it secured another $450 million in loans from its top two investors, Volvo and Geely.
Despite the lower near-term expectations, Polestar expects the launch of new electric models to drive up demand.
The company’s first electric SUV coupe, the Polestar 4, will begin production next week. Polestar will start delivering the new EV to customers next month.
Meanwhile, the Polestar 3 electric SUV is “on track” to begin production in China in early 2024 and over the summer in the US. The company said its electric SUV recently completed hot weather testing in the UAE.
The Polestar 3 is “better positioned” for the US market, according to CEO Thomas Ingenlath. Polestar’s electric SUV (launch edition) will start at $83,900 in the US with up to 300 miles range.
Powered by the same platform as the new Volvo EX90, the Polestar 3 will be available in two trims – a long-range dual motor and a performance pack version. Both will use a 400 V battery with 111 kWh capacity.
Polestar will continue developing the brand, focusing on increasing volume and profitability. With four models expected (including the Polestar 5), the EV maker aims to deliver around 155,000-165,000 vehicles.
By mid-decade, Polestar expects gross profit margins in the high teens. The company says an improved offering of vehicles and additional measures will help boost profitability.
Polestar also teased a new plant on the company’s earnings call that would not be in China but didn’t specify where.
With one fully electric vehicle currently, Polestar expects to hit the lower end of its delivery target this year.
Meanwhile, the EV maker expects new launches, including the Polestar 3 and 4, to increase demand. So is it an EV demand problem, or is it that Polestar doesn’t have models in the right segments yet?
Polestar said it will continue a “targetted approach” with EV models like the Polestar 3 aligning with the US market.
Other EV makers have reported mixed results. Although Lucid also lowered its target, Rivian raised it for the second time this year. Again, is it the market, or is it the models?
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