- Total revenue of USD 613 million, an increase of 41% year on
year
- 13,976 cars delivered, an increase of 51%
- Cash and cash equivalents of USD 951 million as of September
30, 2023
Polestar Automotive Holding UK PLC (“Polestar” or the
“Company,” Nasdaq: PSNY), the Swedish electric performance car
brand, reports its preliminary unaudited financial and operational
results for the three and nine months ended September 30, 2023.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20231108507023/en/
Polestar 2, Polestar 3, Polestar 4,
Polestar 5 (Photo: Business Wire)
Key financial highlights1 The below table summarizes key
unaudited financial results for the nine-months ended September 30,
2023: (in millions of U.S. dollars)
For the nine months ended
September 30,
% Change
2023
2022
%
Revenue
1,844.4
1,476.7
25
Cost of sales
(1,823.2)
(1,419.3)
28
Gross profit
21.2
57.5
(63)
Gross margin (%)
1.1
3.9
n/m
Selling, general and administrative
expense
(684.9)
(625.4)
10
Research and development expense
(136.2)
(123.4)
10
Other operating income (expense), net
64.9
(18.0)
(461)
Listing expense(1)
—
(372.3)
n/m
Operating loss
(735.0)
(1,081.6)
(32)
Adjusted operating loss(2)
(735.0)
(709.3)
4
(1)
The listing expense represents a
non-recurring, non-cash, share-based listing charge, incurred in
connection with the business combination with Gores Guggenheim, Inc
(GGI). on June 23, 2022
(2)
Non-GAAP measure. See Appendix B for
details and a reconciliation of adjusted metrics to the nearest
GAAP measure.
- Revenue increased USD 367.7 million, or 25%, mainly driven by
price increases to model year 2023 and model year 2024 vehicles
with continued vehicle sales expansion across markets.
- Gross profit decreased USD 36.3 million, or 63%, as the result
of higher contract manufacturing, warranty, and freight costs,
irregular supplier charges related to batteries and semiconductors,
and increased inventory impairment. This decrease was partially
offset by favourable impacts of price increases established in the
second half of 2022.
- Selling, general and administrative expenses increased USD 59.5
million, or 10%. This increase is primarily due to higher
advertising, selling, and promotional activities primarily related
to media campaigns across European markets and marketing
productions for the Polestar 3 and 4.
- Research and development expenses increased USD 12.8 million,
or 10% due to increase in headcount costs for full-time employees.
This increase was offset by lower amortization of intellectual
property related to the Polestar 2 following a revision in the
estimated useful life and recognition of sunk costs related to the
P10 powertrain, which were incurred in March and June 2022.
- Other operating income (expense), net increased by USD 82.8
million or 461%. This increase is primarily driven by positive
foreign exchange effects on working capital and a recognition of a
gain on the sale of the Chengdu manufacturing plant.
- Operating loss decreased by USD 346.6 million, or 32%, impacted
by a Q2 2022 one-time share-based listing charge of USD 372.3
million.
- Adjusted operating loss increased USD 25.7 million, or 4%,
primarily due to lower gross profit during the 9 months ended
September 30, 2023.
The below table summarizes key unaudited financial results for
the quarter ended September 30, 2023: (in millions of U.S.
dollars)
For the three months ended
September 30,
% Change
2023
2022
%
Revenue
613.2
435.4
41
Cost of sales
(609.6)
(431.4)
41
Gross profit
3.6
4.1
(11)
Gross margin (%)
0.6
0.9
n/m
Selling, general and administrative
expense
(236.2)
(178.6)
32
Research and development expense
(54.9)
(24.6)
123
Other operating income (expense), net
26.3
2.8
846
Listing expense
—
—
n/m
Operating loss
(261.2)
(196.4)
33
Adjusted operating loss
(261.2)
(196.4)
33
Variances for 3 months ended September 30, 2023 and 2022 largely
followed the trends outlined for 9 months ended September 30, 2023
and 2022, with the following notable exception:
- Revenue increased USD 177.7 million, or 41%, primarily driven
by price increases to model year 2023 and model year 2024 vehicles
with continued vehicle sales expansion across markets.
- Gross profit decreased USD 0.5 million, or 11%, primarily
driven by irregular supplier charges related to batteries and
semiconductors and increased inventory impairment. This decrease
was partially offset by foreign currency transaction effects on
contract manufacturing costs.
- Selling, general and administrative expenses increased USD 57.6
million, or 32%, primarily driven by higher advertising, selling,
and promotional activities related to media campaigns across
European markets. Additionally, higher administrative and selling
personnel expenses were incurred to meet the demands of the growing
business.
- Research and development expenses increased USD 30.3 million,
or 123%, primarily driven by an increase in headcount costs for
full-time employees, combined with recognition of sunk costs
related to a change in electrical architecture for the Polestar 5.
This increase in expense is partially offset by lower amortization
of intellectual property related to the Polestar 2, following a
revision in the estimated useful life and recognition of sunk costs
related to the P10 powertrain which were incurred in March and June
2022.
- Other operating income (expense), net increased by USD 23.5
million or 846%, primarily driven by positive foreign exchange
effects on working capital and a recognition of a gain on the sale
of the Chengdu manufacturing plant.
- Operating and adjusted operating loss increased by USD 64.8
million, or 33%, primarily driven by a lower gross profit and
higher operating expenses.
Cash flow highlights The below table summarizes
preliminary unaudited cash flow for the nine months ended September
30, 2023 and 2022: (in millions of U.S. dollars)
For the nine months ended
September 30,
2023
Beginning cash
973.9
Operating
(1,334.8)
Investing
(189.4)
Financing
1,545.3
Foreign exchange effect on cash and cash
equivalents
(43.9)
Ending cash
951.1
- Operating cash outflow of USD 1,334.8 million, mainly driven by
negative changes in working capital.
- Investing cash outflow of USD 189.4 million, predominantly
driven by intellectual property investments related to the Polestar
2, Polestar 3 and Polestar 4; offset by cash consideration received
pertaining to the Group’s sale of its Chengdu manufacturing
plant.
- Financing cash inflow of 1,545.3 million, primarily due to
increased reliance on short-term debt financing.
Preliminary key operational highlights The below table
summarizes key preliminary operational results as of and for the
nine months ended September 30, 2023:
For the nine months ended
September 30,
% Change
2023
2022
Global volumes1
41,817
30,424
37
– including external vehicles with
repurchase obligations
1,955
799
– including internal vehicles
1,445
1,421
For the nine months ended
September 30,
Change
Markets2
27
27
—
Locations3
157
128
+29
Service points4
1,135
1,033
+102
(1)
Represents the sum of total volume of
vehicles delivered for (a) external sales of new vehicles without
repurchase obligations, (b) external sales of vehicles with
repurchase obligations, and (c) internal use vehicles for
demonstration and commercial purposes or to be used by Polestar
employees (vehicles are owned by Polestar and included in
inventory). A vehicle is deemed delivered and included in the
volume figure for each category once invoiced and registered to the
external or internal counterparty, irrespective of revenue
recognition. Revenue is recognized in scenarios (a) and (b) in
accordance with IFRS 15, Revenue from Contracts with Customers, and
IFRS 16, Leases, respectively. Revenue is not recognized in
scenario (c).
(2)
Represents the markets in which Polestar
operates.
(3)
Represents Polestar Spaces, Polestar
Destinations, and Polestar Test Drive Centres.
(4)
Represents Volvo Cars service centres to
provide access to customer service points worldwide in support of
Polestar’s international expansion.
- Global volumes increased 11,393 to 41,817 cars in the first
nine months of 2023, an increase of 37% year on year.
- Polestar has 157 retail locations and 1,135 service points
across its markets, up 29 and 102 respectively, as compared to the
nine months ended September 30, 2022.
2023 Outlook We now expect to deliver approximately
60,000 vehicles for this year and a gross margin of approximately
2% for the full year.
Upcoming reporting and other events Polestar management
will hold a live audio webcast today, 8 November 2023 at 14:00 PT
(17:00 ET or 23:00 CET). The live audio webcast will be available
at
https://investors.polestar.com/events/event-details/q323-results-webcast.
Following the completion of the call, a replay will be available
at https://investors.polestar.com/.
Polestar expects to post its unaudited financial and operational
results and MD&A for the third quarter of 2023 on or before
November 17, 2023.
Statement Regarding Preliminary Unaudited Financial and
Operational Results The unaudited financial and operational
information published herein is preliminary and subject to
potential adjustments. Potential adjustments to operational and
consolidated financial information may be identified from further
work performed during Polestar’s quarter-end review. This could
result in differences from the unaudited operational and financial
information published herein. For the avoidance of doubt, the
preliminary unaudited operational and financial information
published herein should not be considered a substitute for the
further financial information to be filed with the SEC for the
quarter ended September 30, 2023 expected in mid-November.
About Polestar Polestar (Nasdaq: PSNY) is the Swedish
electric performance car brand determined to improve society by
using design and technology to accelerate the shift to sustainable
mobility. Headquartered in Gothenburg, Sweden, its cars are
available online in 27 markets globally across North America,
Europe and Asia Pacific.
Polestar plans to have a line-up of five performance EVs by
2026. Polestar 2, the electric performance fastback, launched in
2019. Polestar 3, the SUV for the electric age, launched in late
2022. Polestar 4, the SUV coupé transformed, is launching in phases
through 2023 and into 2024. Polestar 5, an electric four-door GT
and Polestar 6, an electric roadster, are coming soon.
The Polestar 0 project supports the company’s ambitious goal of
creating a truly climate-neutral production car by 2030. The
research initiative also aims to create a sense of urgency to act
on the climate crisis, by challenging employees, suppliers and the
wider automotive industry, to drive towards zero.
Forward-Looking Statements Certain statements in this
press release (“Press Release”) may be considered “forward-looking
statements” as defined in the Private Securities Litigation Reform
Act of 1995. Forward-looking statements generally relate to future
events or the future financial or operating performance of Polestar
including the number of vehicle deliveries and gross margin. For
example, projections of revenue, volumes, margins, cash flow
break-even and other financial or operating metrics and statements
regarding expectations of future needs for funding and plans
related thereto are forward-looking statements. In some cases, you
can identify forward-looking statements by terminology such as
“may”, “should”, “expect”, “intend”, “will”, “estimate”,
“anticipate”, “believe”, “predict”, “potential”, “forecast”,
“plan”, “seek”, “future”, “propose” or “continue”, or the negatives
of these terms or variations of them or similar terminology. Such
forward-looking statements are subject to risks, uncertainties, and
other factors which could cause actual results to differ materially
from those expressed or implied by such forward looking
statements.
These forward-looking statements are based upon estimates and
assumptions that, while considered reasonable by Polestar and its
management, as the case may be, are inherently uncertain. Factors
that may cause actual results to differ materially from current
expectations include, but are not limited to: (1) Polestar’s
ability to maintain agreements or partnerships with its strategic
partners, such as Volvo Cars, Geely or Xingji Meizu Group, and to
develop new agreements or partnerships; (2) Polestar’s ability to
maintain relationships with its existing suppliers, source new
suppliers for its critical components and enter into longer term
supply contracts and complete building out its supply chain, while
effectively managing the risks due to such relationships; (3)
Polestar’s reliance on its partnerships with vehicle charging
networks to provide charging solutions for its vehicles and its
reliance on strategic partners for servicing its vehicles and their
integrated software; (4) Polestar’s reliance on its partners, some
of which may have limited experience with electric vehicles, to
manufacture vehicles at a high volume or develop devices, products,
apps or operating systems for Polestar, and to allocate sufficient
production capacity or resources to Polestar in order for Polestar
to be able to increase its vehicle production capacities and
product offerings; (5) the ability of Polestar to grow and manage
growth profitably including expectations of growth and financial
performance by generating expected revenues at expected selling
prices, maintain relationships with customers and retain its
management and key employees; (6) Polestar’s estimates of expenses,
profitability, gross margin, cash flow, and cash reserves; (7)
increases in costs, disruption of supply or shortage of materials,
in particular for lithium-ion cells or semiconductors; (8) the
possibility that Polestar may be adversely affected by other
economic, business, and/or competitive factors; (9) the effects of
competition and the high barriers to entry in the automotive
industry, and the pace and depth of electric vehicle adoption
generally on Polestar’s future business; (10) changes in regulatory
requirements, governmental incentives and fuel and energy prices;
(11) the outcome of any legal proceedings that may be instituted
against Polestar or others, adverse results from litigation,
governmental investigations or audits, or tax-related proceedings
or audits; (12) the ability to meet stock exchange listing
standards; (13) changes in applicable laws or regulations or
governmental incentive programs; (14) Polestar’s ability to
establish its brand and capture additional market share, (15) the
risks associated with negative press or reputational harm,
including from lithium-ion battery cells catching fire or venting
smoke; (65) delays in the design, development, manufacture, launch
and financing of Polestar’s vehicles and other product offerings,
and Polestar’s reliance on a limited number of vehicle models to
generate revenues; (16) Polestar’s ability to continuously and
rapidly innovate, develop and market new products; (17) risks
related to future market adoption of Polestar’s offerings; (18)
risks related to Polestar’s distribution model; (19) the impact of
the global COVID-19 pandemic, inflation, interest rate changes, the
ongoing conflict between Ukraine and Russia and in Israel and the
Gaza Strip, supply chain disruptions, fuel and energy prices and
logistical constraints on Polestar, Polestar’s projected results of
operations, financial performance or other financial and
operational metrics, or on any of the foregoing risks; (20)
Polestar’s ability to forecast demand for its vehicles; (21)
Polestar’s ability to raise additional funding; (22) Polestar’s
ability to successfully execute cost-cutting activities and
strategic efficiency initiatives; (and (23) other risks and
uncertainties set forth in the sections entitled “Risk Factors” and
“Cautionary Note Regarding Forward-Looking Statements” in
Polestar’s Form 20-F, and other documents filed, or to be filed,
with the SEC by Polestar. There may be additional risks that
Polestar presently does not know or that Polestar currently
believes are immaterial that could also cause actual results to
differ from those contained in the forward-looking statements.
Nothing in this Press Release should be regarded as a
representation by any person that the forward-looking statements
set forth herein will be achieved or that any of the contemplated
results of such forward-looking statements will be achieved. You
should not place undue reliance on forward-looking statements,
which speak only as of the date they are made. Polestar assumes no
obligation to update these forward-looking statements, even if new
information becomes available in the future, except as may be
required by law.
Appendix A
Polestar Automotive Holding UK
PLC
Preliminary Unaudited Consolidated
Statement of Income (Loss)
(in thousands of U.S. dollars unless
otherwise stated)
For the three months ended
September 30,
For the nine months ended
September 30,
2023
2022
2023
2022
Revenue
613,182
435,449
1,844,447
1,476,746
Cost of sales
(609,581
)
(431,390
)
(1,823,234
)
(1,419,271
)
Gross profit
3,601
4,059
21,213
57,475
Selling, general and administrative
expense
(236,246
)
(178,643
)
(684,877
)
(625,424
)
Research and development expense
(54,865
)
(24,598
)
(136,176
)
(123,353
)
Other operating income (expense), net
26,305
2,781
64,886
(17,961
)
Listing expense
—
—
—
(372,318
)
Operating loss
(261,205
)
(196,401
)
(734,954
)
(1,081,581
)
Finance income
8,997
711
21,487
1,485
Finance expense
(63,389
)
(60,539
)
(153,904
)
(111,966
)
Fair value change - Earn-out rights
155,557
546,961
388,552
965,668
Fair value change - Class C Shares
7,250
14,059
18,000
35,590
Income (loss) before income
taxes
(152,790
)
304,791
(460,819
)
(190,804
)
Income tax expense
(2,579
)
(5,404
)
(7,581
)
(12,543
)
Net income (loss)
(155,369
)
299,387
(468,400
)
(203,347
)
Polestar Automotive Holding UK
PLC
Preliminary Unaudited Consolidated
Statement of Financial Position
(in thousands of U.S. dollars unless
otherwise stated)
September 30, 2023
December 31, 2022
Assets
Non-current assets
Intangible assets and goodwill
1,529,706
1,396,477
Property, plant, and equipment
259,656
258,048
Vehicles under operating leases
93,945
92,198
Other non-current assets
4,008
5,306
Deferred tax asset
17,628
7,755
Other investments
2,225
2,333
Total non-current assets
1,907,168
1,762,117
Current assets
Cash and cash equivalents
951,088
973,877
Trade receivables
140,382
246,107
Trade receivables - related parties
135,180
74,996
Accrued income - related parties
75,323
49,060
Inventories
1,005,607
658,559
Current tax assets
8,010
7,184
Assets held for sale
—
63,224
Other current assets
160,816
107,327
Other current assets - related parties
2,890
—
Total current assets
2,479,296
2,180,334
Total assets
4,386,464
3,942,451
Equity
Share capital
(21,168
)
(21,165
)
Other contributed capital
(3,587,871
)
(3,584,232
)
Foreign currency translation reserve
42,796
12,265
Accumulated deficit
4,195,176
3,726,775
Total equity
628,933
133,643
Liabilities
Non-current liabilities
Non-current contract liabilities
(60,866
)
(50,252
)
Deferred tax liabilities
(461
)
(476
)
Other non-current provisions
(107,844
)
(73,985
)
Other non-current liabilities
(60,641
)
(14,753
)
Earn-out liability
(210,019
)
(598,570
)
Other non-current interest-bearing
liabilities
(74,529
)
(85,556
)
Total non-current liabilities
(514,360
)
(823,592
)
Current liabilities
Trade payables
(96,079
)
(98,458
)
Trade payables - related parties
(632,354
)
(957,497
)
Accrued expenses - related parties
(323,462
)
(164,902
)
Advance payments from customers
(18,487
)
(40,869
)
Current provisions
(63,884
)
(74,907
)
Liabilities to credit institutions
(2,036,525
)
(1,328,752
)
Current tax liabilities
(14,370
)
(10,617
)
Interest-bearing current liabilities
(28,821
)
(21,545
)
Interest-bearing current liabilities -
related parties
(829,658
)
(16,690
)
Current contract liabilities
(101,224
)
(46,217
)
Class C Shares liability
(10,000
)
(28,000
)
Other current liabilities
(308,174
)
(393,790
)
Other current liabilities - related
parties
(37,999
)
(70,258
)
Total current liabilities
(4,501,037
)
(3,252,502
)
Total liabilities
(5,015,397
)
(4,076,094
)
Total equity and liabilities
(4,386,464
)
(3,942,451
)
Polestar Automotive Holding UK
PLC
Preliminary Unaudited Consolidated
Statement of Cash Flows
(in thousands of U.S. dollars unless
otherwise stated)
For the nine months ended
September 30,
2023
2022
Cash flows from operating
activities
Net loss
(468,400
)
(203,347
)
Adjustments to reconcile net loss to net
cash flows:
Depreciation and amortization expense
101,499
140,063
Warranties
56,805
—
Inventory impairment
39,415
—
Finance income
(21,487
)
(1,485
)
Finance expense
153,904
111,966
Fair value change - Earn-out rights
(388,552
)
(965,668
)
Fair value change - Class C Shares
(18,000
)
(35,590
)
Listing expense
—
372,318
Income tax expense
7,581
12,543
Other non-cash expense
16,646
12,497
Change in operating assets and
liabilities:
Inventories
(372,504
)
(311,154
)
Vehicles under operating leases
—
17,722
Contract liabilities
69,033
(16,390
)
Trade receivables, prepaid expenses and
other assets
(113,113
)
(43,458
)
Trade payables, accrued expenses and other
liabilities
(306,039
)
(60,645
)
Interest received
21,487
1,485
Interest paid
(98,549
)
(37,075
)
Taxes paid
(14,543
)
(17,207
)
Cash used for operating
activities
(1,334,817
)
(1,023,425
)
Cash flows from investing
activities
Additions to property, plant and
equipment
(51,699
)
(7,452
)
Additions to intangible assets
(293,048
)
(642,846
)
Additions to other investments
—
(2,480
)
Proceeds from the sale of property, plant
and equipment
1,747
—
Proceeds from disposal of asset grouping
classified as held for sale
153,586
—
Cash used for investing
activities
(189,414
)
(652,778
)
Cash flows from financing
activities
Proceeds from short-term borrowings
3,422,189
1,555,201
Principal repayments of short-term
borrowings
(1,857,680
)
(957,186
)
Principal repayments of lease
liabilities
(19,160
)
(11,332
)
Proceeds from the issuance of share
capital and other contributed
—
1,417,973
Transaction costs
—
(38,903
)
Cash provided by financing
activities
1,545,349
1,965,753
Effect of foreign exchange rate changes on
cash and cash
(43,907
)
(57,968
)
Net increase in cash and cash
equivalents
(22,789
)
231,582
Cash and cash equivalents at beginning
of period
973,877
756,677
Cash and cash equivalents at end of
period
951,088
988,259
Appendix B
Polestar Automotive Holding UK PLC Preliminary
Non-GAAP Financial Measures Polestar uses both generally
accepted accounting principles (i.e., IFRS known as “GAAP”) and
non-GAAP (i.e., non-IFRS) financial measures to evaluate operating
performance, internal comparisons to historical performance, and
other strategic and financial decision-making purposes. Polestar
believes non-GAAP financial measures are helpful to investors as
they provide a useful perspective on underlying business trends and
assist in period-on-period comparisons. These measures also improve
the ability of management and investors to assess and compare the
financial performance and position of Polestar with those of other
companies.
These non-GAAP measures are presented for supplemental
information purposes only and should not be considered a substitute
for financial information presented in accordance with GAAP. The
measures are not presented under a comprehensive set of accounting
rules and, therefore, should only be read in conjunction with
financial information reported under GAAP when understanding
Polestar's operating performance.
The measures may not be the same as similarly titled measures
used by other companies due to possible differences in calculation
methods and items or events being adjusted. A reconciliation
between non-GAAP financial measures and the most comparable GAAP
performance measures is provided below.
Non-GAAP financial measures include adjusted operating loss,
adjusted EBITDA, adjusted net loss, and free cash flow.
Adjusted Operating Loss
Polestar defines adjusted operating loss as an Operating loss,
adjusted to exclude listing expense. This measure is reviewed by
management and provides a relevant measure for understanding the
ongoing operating performance of the business prior to the impact
of the non-recurring adjusting item.
Adjusted EBITDA
Adjusted EBITDA is calculated as Net loss, adjusted for listing
expense, fair value change of earn-out rights, fair value change of
the Class C Shares, interest income, interest expense, income tax
expense, depreciation, and amortization. Adjusted EBITDA is defined
as EBITDA, adjusted for certain income and expenses which are
significant in nature and that management considers not reflective
of ongoing operational activities. This measure is reviewed by
management and is a relevant measure for understanding the
underlying operating results and trends of the business prior to
the impact of any adjusting items.
Adjusted Net Loss
Adjusted net loss is calculated as Net loss, adjusted to exclude
listing expense, fair value change of earn-out rights, and fair
value change of the Class C Shares. This measure represents net
loss, adjusted for certain income and expenses which are
significant in nature and that management considers not reflective
of ongoing operational activities. This measure is reviewed by
management and is a relevant measure for understanding the
underlying performance of Polestar's core business operations.
Free Cash Flow
Free cash flow is calculated as cash used for operating
activities, adjusted for cash flows used for tangible assets and
intangible assets. This measure is reviewed by management and is a
relevant measure for understanding cash sourced from operating
activities that is available to repay debts, fund capital
expenditures, and spend on other strategic initiatives.
Unaudited Reconciliation of GAAP and
Non-GAAP Results
Adjusted Operating Loss
For the three months ended
September 30,
For the nine months ended
September 30,
2023
2022
2023
2022
Operating loss
(261,205
)
(196,401
)
(734,954
)
(1,081,581
)
Listing expense
—
—
—
372,318
Adjusted operating loss
$
(261,205
)
$
(196,401
)
$
(734,954
)
$
(709,263
)
Adjusted EBITDA
For the three months ended
September 30,
For the nine months ended
September 30,
2023
2022
2023
2022
Net loss
(155,369
)
299,387
(468,400
)
(203,347
)
Listing expense
—
—
—
372,318
Fair value change - Earn-out rights
(155,557
)
(546,961
)
(388,552
)
(965,668
)
Fair value change - Class C Shares
(7,250
)
(14,059
)
(18,000
)
(35,590
)
Interest income
(8,997
)
(711
)
(21,487
)
(1,485
)
Interest expenses
59,011
11,824
130,736
46,205
Income tax expense
2,579
5,404
7,581
12,543
Depreciation and amortization
51,345
69,363
101,499
140,063
Adjusted EBITDA
$
(214,238
)
$
(175,753
)
$
(656,622
)
$
(634,961
)
Adjusted Net Loss
For the three months ended
September 30,
For the nine months ended
September 30,
2023
2022
2023
2022
Net loss
(155,369
)
299,387
(468,400
)
(203,347
)
Listing expense
—
—
—
372,318
Fair value change - Earn-out rights
(155,557
)
(546,961
)
(388,552
)
(965,668
)
Fair value change - Class C Shares
(7,250
)
(14,059
)
(18,000
)
(35,590
)
Adjusted net loss
$
(318,176
)
$
(261,633
)
$
(874,952
)
$
(832,287
)
Free Cash Flow
For the nine months ended
September 30,
2023
2022
Cash used for operating activities
(1,334,817
)
(1,023,425
)
Additions to property, plant and
equipment
(51,699
)
(7,452
)
Additions to intangible assets
(293,048
)
(642,846
)
Free cash flow
$
(1,679,564
)
$
(1,673,723
)
Appendix C
Certain Updated Risk Factors The following risk factors
should be read in conjunction with the risk factors included in
Item 3.D “Risk Factors” in the Form 20-F filed with the SEC on
April 14, 2023.
Polestar’s future growth and financial performance depends on
the production and sale of its current and new vehicle models on an
anticipated timeline and within an anticipated cost and pricing
structure.
Polestar’s ability to meet its expectations of growth and
financial performance depends on the production and sales of its
current and new vehicle models on an anticipated timeline and
within an anticipated cost and pricing structure. There are a
number of risks inherent in the pursuit of such expectations,
and—as discussed below—the occurrence of any combination of which
could have a material, adverse effect on Polestar’s business,
results of operations and financial condition:
-risks relating to the production of Polestar’s current and new
vehicle models, including potential delays in the production of new
vehicle models, Polestar’s reliance on its strategic partners as
contract manufacturers and for the provision and development of key
components, technology and materials used in Polestar’s vehicles,
and the availability and pricing of raw materials and components
necessary for the production of Polestar’s vehicles;
-risks relating to the cost of production of Polestar’s current
and future vehicle models and other expenses of the business and
Polestar’s ability to manage such costs and expenses;
-Polestar’s ability to accurately forecast demand for its
current and future vehicle models, which may, among other things,
negatively impact profit margins; and
-customer acceptance of Polestar’s current and future vehicle
models, which, in addition to directly impacting sales volumes, may
impact pricing levels for Polestar’s vehicles and, as a result,
profit margins.
As discussed below, if any combination of these risks were to
occur, it could have a material and adverse effect on Polestar’s
business, results of operations and financial condition.
Polestar (either directly or due to its third-party suppliers
and partners) has experienced in the past, and may experience in
the future, delays with regard to the development, design,
manufacture and commercial release of its current and new models of
vehicles. Production delays can be caused by a variety of factors,
including increases in the cost of or a sustained interruption in
the supply or shortage of materials. Any delays may have a
materially negative impact on Polestar’s results of operations and
financial condition.
The new Polestar 3 vehicle model launched in late 2022, and
production is expected to begin in early 2024 and ramp-up during
the same year. Production of the new Polestar 4 model will begin in
the coming days and is expected to ramp up into 2024. To the extent
that production or production ramp-up of these new vehicle models
or of the Polestar 2, which is currently in production, is delayed
or reduced, including in the newest production facility in
Charleston, South Carolina (which is owned and operated by
Polestar’s manufacturing partners) or other future production
facilities, Polestar’s revenues, cash flow and reputation would be
adversely affected. Furthermore, Polestar relies on its strategic
partners and suppliers for the provision and development of many of
the key components, technology and materials used in its vehicles.
To the extent Polestar’s strategic partners or suppliers experience
any delays or capacity constraints in providing Polestar with or
developing necessary components, technology and materials, Polestar
could experience delays in delivering on its timelines. Polestar
may be able to establish alternate supply relationships and obtain
or engineer replacement components for its vehicles, but it may be
unable to do so quickly at prices or quality levels that are
acceptable to it, or at all.
Customers’ acceptance and purchase of Polestar’s vehicles are a
critical components of its business. New Polestar models, including
the recent Polestar 3 and Polestar 4 models, may not meet market
expectations or be well-received by the market due to design,
software or other characteristics, which could result in these
vehicles penetrating the market at lower than expected rates and
could ultimately lead to lower than expected sales volumes. Any
negative third-party reviews of new Polestar models could have an
adverse effect on consumer perception of these new models. In
addition, if the average selling price for new models is below
expectations, Polestar may be unable to meet its revenue, cash flow
or gross margin expectations. As an SUV, the Polestar 3 is
especially critical for the US market given its associated margin
opportunity and the demand for SUVs in the US. Polestar has
previously experienced lower than expected demand in the US and it
could continue to do so. Additionally, Polestar’s sales volumes in
the US market could be negatively impacted by delays in the
enactment of regulations that incentivize broader market shifts to
electric vehicles.
Additionally, if Polestar fails to continue to sell the Polestar
2 at anticipated levels while sales of the Polestar 3 and Polestar
4 ramp-up, Polestar will be unable to meet its revenue and cash
flow expectations. Any failure to meet revenue expectations from
sales of the Polestar 2, Polestar 3 and Polestar 4 models or other
new models could result in Polestar not meeting its gross margin
and profitability expectations and could materially damage
Polestar’s business, prospects, results of operations and financial
condition.
Polestar has previously experienced cost overruns and may
experience cost overruns again in the future. Higher than expected
cost of goods sold could occur from a variety of factors—including,
but not limited to, unexpected increases in prices of raw
materials; the pricing/availability of supplies and components
(e.g. battery cells); higher than expected warranty claims; higher
than expected equipment, freight and energy costs; reliance on
third-party partner manufacturing and the imposition of new or
increased customs duties, including those that could result from
delays in production in the newest facilities that produce Polestar
vehicles, located in Charleston, South Carolina and another
location to be announced shortly, which would require continued
exports of vehicles from China. This may result in higher customs
duties. Additionally, any increase in Polestar’s or its
manufacturing partners’ labour costs as a result of union activity,
pay increases to employees or otherwise, could result in increased
overall costs to Polestar. Polestar has also begun certain cost
savings initiatives and it may be unable to achieve the planned
cost efficiency savings. Any inability to mitigate cost overruns or
to achieve anticipated cost savings would negatively impact
Polestar’s financial performance.
Polestar’s future financial performance requires Polestar to
accurately forecast demand for its vehicles. To the extent Polestar
underestimates demand for its vehicles, Polestar’s strategic
partners and suppliers may have inadequate manufacturing capacity
and/or inventory, resulting in the interruption of manufacturing of
Polestar’s products and possible delays in shipments and revenues.
To the extent Polestar overestimates demand, Polestar may need to
offer deeper discounts and experience greater than expected sales
volumes of discounted vehicles. For example, Polestar’s competitors
have recently cut prices for their models in order to address
supply relative to demand for electric vehicles, and Polestar may
be forced to do the same in order to remain competitive. Polestar
may also experience higher than expected advertising, sales and
promotion costs or may be unable to effectively charge such costs
to its customers, which could have negative effects on Polestar’s
financial performance. An inaccurate forecast in demand for its
products may also result in a negative shift in its product mix
(e.g., vehicles sold with fewer options and trim levels, higher
than expected sales volumes of lower-priced variants). Furthermore,
Polestar may experience shifts in its sales channel mix, including,
but not limited to, a higher number of lower-margin fleet sales
than planned. It may also experience a shift in Polestar’s regional
sales mix, especially lower than expected sales in the United
States, which Polestar is currently experiencing. It may also need
to write-down the value of its inventory. If Polestar experiences
fluctuations in the demand for its products that is not accurately
forecasted, it may experience one or more of the impacts outlined
above and its results of operations and financial condition may be
negatively affected. Lower gross margin, in conjunction with higher
than expected expenses (including, but not limited to, selling,
general and administrative expenses and research and development
expenses), among other factors, could ultimately lead to lower
operating margin, cash flow and profitability as well.
Polestar’s future growth and financial performance are
dependent on it meeting its ability to generate positive cash flow
from its operations and to raise the necessary capital to fund its
business plan and service its debt obligations.
If Polestar is unable to raise additional funds through equity
and debt financings, or other means when needed, it may be required
to delay, limit, reduce, or, in the worst case, discontinue the
production and sale of its vehicles as well as research and
development and commercialization efforts and may not be able to
fund continuing operations, all of which could adversely impact
Polestar’s business, results of operation and financial condition.
Polestar has in the past and expects to continue to accumulate a
deficit on both a cash and IFRS basis until at least 2025. After
giving effect to the $200 million increase in available borrowings
under the credit facility with Volvo Cars and entry into the new
$250 million credit facility with Geely Sweden Automotive
Investment AB and existing financing and liquidity support from
Geely Holding and Volvo Cars, Polestar estimates that approximately
$1.3 billion in incremental external funding will be required to
fund its current business plan through the end of fiscal year 2025.
As a result of these cash requirements, Polestar will need to
obtain additional financing and intends to do so through a
combination of equity and debt financings, or other means. To the
extent Polestar raises additional capital through the sale of
equity or convertible debt securities, the ownership interest of
its shareholders may be diluted, and the terms of such securities
may include liquidation or other preferences that adversely affect
the rights of its existing shareholders. Debt financing, if
available, may involve agreements that include covenants limiting
or restricting Polestar’s ability to take specific actions, such as
incurring additional debt, making capital expenditures, or
declaring dividends. Any financing arrangements may require the
payment of higher interest or preferred dividends, which will
impact cash retention. If Polestar is unable to raise additional
funds through equity and debt financings, or other means when
needed, it may be required to delay, limit, reduce, or, in the
worst case, discontinue the production and sale of its vehicles, as
well as related research and development and commercialization
efforts, and may not be able to fund continuing operations, all of
which could have a material adverse effect on Polestar’s business,
results of operations and financial condition. There can be no
assurance that Polestar will be able to raise the additional
funding it expects to need on commercially attractive terms, or at
all.
Polestar’s future growth and financial performance envisions
Polestar introducing and growing additional revenue streams,
including those relating to used car sales, aftermarket
sales/services, technology licensing and revenue from financing.
For example, Polestar is cooperating with Volvo Cars to develop
their service centre network, including the introduction of digital
service booking, fault tracing, diagnostics and software download
(Over-the-Air and in workshop). If Polestar fails to realize
revenue from these possible additions to its business or fails to
realize such revenue at the expected levels, its cash flows and
profitability may be negatively impacted.
Although it has taken initiatives to reduce its expenditures and
optimize its supply chain and cost structure and increase its cash
flow, these initiatives are dependent on certain assumptions, which
are described in Polestar’s other risk factors, including:
Polestar’s future growth and financial performance depend on its
ability to generate expected revenues from its current and new
vehicle models on a specific timeline and within a specific cost
and pricing structure” and “The success of Polestar’s business and
its future financial performance are dependent on a variety of
factors, including the efficiency, cost-cutting and strategic
initiatives Polestar is implementing. Cost-cutting and efficiency
initiatives are complex and difficult, and additional steps may be
necessary, possibly on short notice and at significant cost.” If
Polestar fails to optimize its supply chain and cost structure, its
cash flows and profitability may be negatively impacted.
If Polestar’s product development or commercialization is
delayed, its cash flow generation may also be delayed and its costs
and expenses may be significantly higher than it currently expects.
Because Polestar will incur the costs and expenses from these
efforts before it receives any incremental revenues with respect
thereto, Polestar expects its losses in future periods may be
significant. There is no assurance that the business will generate
positive cash flow in the future.
Polestar could also experience adverse effects from making
incorrect assumptions about important cash flow items. Such adverse
effects could include, but are not limited to, the following: (i) a
need for additional working capital due to, among other reasons,
higher than expected inventory days and a lack of availability of
trade finance facilities; (ii) higher than expected capital
expenditures related to new vehicle development; (iii) unexpected
decreases in cash flow from financing activities, which could be
the result of, among other factors, an inability to roll one or
more of the working capital facilities with Chinese banking
partners in 2024 or 2025; (iv) an inability to refinance its
existing indebtedness; or (v) an inability to raise additional
financing in 2024, which would ultimately result in continued use
of the China-based working capital facilities for longer than
expected and until they can be gradually refinanced, and such
facilities may not be available on commercially reasonable terms,
or at all.
The deficits that Polestar has incurred, and may continue to
incur in the future, fluctuate significantly from period to period;
thus, even if Polestar achieves positive cash flow from its
operations, it may not be able to sustain or increase such positive
cash flow on a quarterly or annual basis. If Polestar is unable to
generate positive cash flow from operations and raise the necessary
capital to fund its business plans and service its debt
obligations, Polestar may not have sufficient resources to conduct
its business as projected and may have to discontinue or delay the
research and development, production and sale of its vehicles or
reduce its operating expenses, each of which could result in a
material, adverse effect on Polestar’s business, results of
operations and financial condition.
Additionally, Polestar’s international operations require cash
in various subsidiaries. There is a risk that cash is trapped in
one or more subsidiaries due to various corporate or tax laws,
which may result in Polestar’s inability to adequately fund its
operations, which would have a materially negative impact on its
results of operations. For example, Polestar Performance AB (PPAB),
Polestar’s main group operating subsidiary, uses the most cash in
its operations. However, under Swedish law there is a minimum
equity requirement and PPAB is not allowed to consume more than
half of its registered share capital. PPAB’s equity level is
constantly monitored, and it periodically requires equity
injections from Polestar Automotive Holding UK PLC. If cash is
trapped in parts of the Polestar group, such as in PPAB as equity,
and cannot be used for the group’s operations or be used for the
repayment of debt, if the minimum cash requirement is higher than
anticipated or if there is simply insufficient cash to meet this
minimum equity requirement, there may be a materially adverse
impact on Polestar’s results of operations.
Polestar’s reliance on strategic partners and on key
suppliers for manufacturing its vehicles could result in excess
capacity or insufficient capacity to meet demand for its vehicles
or manufacturing delays.
Polestar depends on strategic partners and key suppliers for
manufacturing its vehicles. Polestar employs an asset-light
business model that utilizes contract manufacturing and supply
arrangements primarily with Volvo Cars and Geely. Polestar believes
this business model requires significantly less capital to produce
vehicles and generate revenue compared to traditional manufacturers
or other electric vehicle companies. However, if Polestar
overestimates its requirements, its strategic partners or suppliers
may have excess manufacturing capacity and/or inventory, which
would indirectly increase Polestar’s costs as Polestar may pay for
production capacities that it reserved but will not be able to use,
negatively impacting its gross margins and potentially affecting
when Polestar will become profitable. Underestimation of such
requirements could have a similarly material, adverse effect.
Polestar also depends on its strategic partners to ensure that new
production facilities are operational in the expected timeframe and
with the expected capacity. If Polestar underestimates its
production requirements, its strategic partners and suppliers may
have inadequate manufacturing capacity and/or inventory, which
could interrupt manufacturing of its products and result in delays
in shipments and revenues. In addition, lead times for materials
and components that Polestar’s suppliers order may vary
significantly and could depend on factors such as the specific
supplier, contract terms and demand for each component at a given
time. If Polestar fails to order sufficient quantities of product
components in a timely manner, the delivery of vehicles to its
customers could be delayed. If Polestar’s partners are unable to
deliver necessary components of Polestar’s products on schedule or
at quality levels and volumes acceptable to Polestar, or if Volvo
Cars and Geely experience manufacturing delays beyond Polestar’s
control, the production of Polestar’s vehicles could be delayed.
The underestimation of manufacturing requirements or failure to
timely deliver vehicles would harm Polestar’s brand, business,
prospects, results of operations and financial condition.
The success of Polestar’s business and its future financial
performance are dependent on a variety of factors, including the
efficiency, cost-cutting and strategic initiatives Polestar is
implementing. Cost-cutting and efficiency initiatives are complex
and difficult, and additional steps may be necessary, possibly on
short notice and at significant cost.
Polestar is engaged in a variety of cost-cutting activities and
strategic efficiency initiatives. Its objective is to reduce costs
and improve operational efficiencies, realize productivity gains,
distribution and logistical efficiencies and overhead reductions.
In addition, Polestar expects to continue to restructure its
operations as necessary to improve operational efficiency,
including occasionally opening or closing offices, facilities or
plants. The successful execution of cost-cutting initiatives will
involve sourcing, logistics, technology and employment
arrangements. Because these initiatives can be complex, there may
be difficulties or delays in the implementation of any such
initiatives and they may not be immediately effective, resulting in
an adverse material impact on Polestar’s financial performance. It
will also involve working with suppliers and partners to identify
and generate efficiency who may be unwilling or unable to implement
any initiatives. Gaining additional efficiencies may be difficult
and will likely become increasingly difficult over time as
Polestar’s asset-light business model limits opportunities to
realize operational efficiencies. In addition, there is a risk that
inflation and increased competition may reduce the efficiencies now
available. Therefore, there can be no assurances that the
efficiency and cost-cutting initiatives will be completed as
planned or achieve the desired results. There may also be one-time
and other costs and negative impacts relating to restructurings and
anticipated cost savings, and Polestar’s strategies may not be
implemented or may fail to achieve desired results.
If Polestar is unable to generate anticipated cost savings,
successfully implement its strategies or optimize its supply chain,
it may not realize all anticipated operational and efficiency
benefits and cost savings, which could adversely affect its
business and long-term strategies. It could also require Polestar
to use more of its cash and to seek new or additional financing
sooner than expected or at an undesirable cost. These goals and
strategies may not be implemented or may fail to achieve the
desired results if we are unable to manage Polestar’s costs
effectively. Profitability and cash flow could also suffer, which
could also adversely affect Polestar’s business, financial
condition and results of operations.
Polestar may be unable to adequately control or predict the
substantial costs associated with its operations.
Polestar has incurred and expects to continue to incur
significant costs and expenses in its operations and growth of its
business, including those related to developing and manufacturing
its vehicles, marketing and building its brand, raw material
procurement costs and general and administrative costs. Polestar
has made and expects to continue to make significant investments to
design, research and develop, produce and market new vehicle
models. Such investments can negatively affect Polestar’s
profitability. Additionally, the revenues from new models may not
be sufficient to recoup the costs and investments associated with
their development and may impact Polestar’s ability to generate
future cash flow.
If Polestar does not enter into longer-term supplier agreements
with guaranteed pricing for its parts or components, it may be
exposed to fluctuations in prices of components, materials, labor
and equipment. Agreements for the purchase of battery cells and
other components contain or are likely to contain pricing
provisions that are subject to adjustment based on changes in
market prices of key commodities. Substantial increases in the
prices for raw materials including lithium, cobalt and nickel for
batteries, components, labor and equipment, whether due to supply
chain or logistics issues or due to inflation or other economic
conditions, would increase Polestar’s operating costs and could
reduce its margins if it cannot recoup the increased costs. Any
attempts to increase the announced or expected prices of Polestar’s
vehicles in response to increased costs could be viewed negatively
by its customers or potential customers and could adversely affect
Polestar’s business, prospects, financial condition or results of
operations. Additionally, Polestar has certain minimum purchasing
commitments to its manufacturing partners and suppliers. If
Polestar is unable to meet these commitments, then Polestar’s
manufacturing partners and suppliers may attempt to pass the costs
associated with such commitments to Polestar.
In the event that these expenses are significantly higher than
Polestar anticipates, Polestar could be required to seek additional
financing earlier than it expects. If Polestar is unable to
cost-efficiently develop, design, manufacture, market, sell,
distribute and service its vehicles, its margins, profitability and
prospects would be materially and adversely affected.
Polestar’s success depends on the success of its current and
future partnerships, which could be adversely affected by its lack
of sole decision-making authority and the actions of its co-owners
or partners.
Polestar recently entered into a joint venture agreement with
the technology company Xingji Meizu Group (“Xingji Meizu”) and may
enter into other joint ventures or other strategic partnerships in
the future. The joint venture is expected to strengthen Polestar’s
position and offering in the Chinese electric vehicle market by
bringing together Polestar’s capabilities within design and
performance with the software and consumer electronics hardware
development expertise of Xingji Meizu. The joint venture intends to
develop Xingji Meizu’s existing technology platform, Flyme Auto,
into an operating system for Polestar cars sold in China, including
in-car apps, streaming services, and intelligent vehicle software
as well as mobile and augmented reality devices and customer apps.
Polestar owns 49% of the joint venture company equity, with the
remaining 51% owned by Xingji Meizu. The success of Polestar’s
joint venture with Xingji Meizu, including its ability to meet
sales expectations in China, is critical to Polestar’s overall
performance; if the joint venture does not perform as expected,
Polestar’s ability to ramp up its business and sales in China could
be detrimentally affected. There is no assurance that this joint
venture will be successful. Customers may not purchase vehicles
from the joint venture, and the margins on the vehicles sold in
China will be lower than that in other markets. Additionally, the
technology intended to be developed by the joint venture may not be
successful or may not ultimately be adopted or utilized by the end
consumer. It may take longer to develop and may cost more to
develop than anticipated.
Additionally, there is no assurance that the joint venture will
be able to maintain, identify or secure suitable business
relationships in the future or that these relationships will be
successful.
In its joint venture with Xingji Meizu and other arrangements,
Polestar shares ownership and management of a company with one or
more parties who may not have the same goals and priorities as
Polestar and may compete with Polestar outside the joint venture.
Joint ventures are intended to be operated for the benefit of all
co-owners, rather than for Polestar’s exclusive benefit. If a
co-owner changes, relationships deteriorate or strategic objectives
diverge, Polestar’s success in the joint venture may be materially
adversely affected. Further, some of the benefits from a joint
venture are shared among the co-owners, so Polestar may not receive
all of the benefits of a successful joint venture.
In addition, because Polestar shares ownership and management
with one or more parties, Polestar may have limited control over
the actions of a joint venture, particularly when it owns a
minority interest, as in the joint venture with Xingji Meizu. To
the extent another party makes decisions that negatively impact the
joint venture or internal control issues arise within the joint
venture, Polestar may have to take responsive actions, or Polestar
may be subject to penalties, fines, financial and legal liabilities
or other punitive actions for these activities. The value of the
joint venture may also be materially negatively impacted.
If Polestar’s estimates or judgments relating to its critical
accounting policies are based on assumptions that change or prove
to be incorrect, Polestar’s results of operations could fall below
expectations of securities analysts and investors, resulting in a
decline in the market price of its ordinary shares.
The preparation of financial statements in conformity with IFRS
requires management to make estimates and assumptions that affect
the amounts reported in the consolidated financial statements and
accompanying notes. Polestar bases its estimates on historical
experience and on various other assumptions that it believes to be
reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets,
liabilities, equity, revenue and expenses that are not readily
apparent from other sources. Significant assumptions and estimates
used in preparing Polestar’s consolidated financial statements
include those related to revenue recognition, inventory valuation,
income taxes, impairment of long-lived assets, share-based
compensation, operating leases and fair value of ordinary shares.
If these assumptions change or if actual circumstances differ from
those in these assumptions, Polestar’s results of operations may be
adversely affected and may fall below the expectations of
securities analysts and investors, resulting in a decline in the
market price of Polestar’s ordinary shares.
Polestar faces risks associated with international
operations, including tariffs and unfavourable regulatory,
political, tax and labour conditions, which could materially and
adversely affect its business, prospects, results of operations and
financial condition.
Polestar has operations and subsidiaries in Europe, North
America and Asia that are subject to the legal, political,
regulatory and social requirements and economic conditions in these
jurisdictions. Additionally, as part of its growth strategy,
Polestar intends to expand its sales, maintenance and repair
services and manufacturing activities to new countries in the
coming years. However, Polestar has limited experience in
manufacturing, selling or servicing its vehicles, and such
expansion would require it to make significant expenditures,
including the hiring of local employees, in advance of generating
any revenue.
Polestar is subject to a number of risks associated with
international business activities that may increase its costs;
impact its ability to sell, service and manufacture its vehicles;
and require significant management attention.
These risks include:
- conforming Polestar’s vehicles to various international
regulatory requirements of jurisdictions where its vehicles are
sold or homologated;
- establishing localized supply chains and managing international
supply chain and logistics costs;
- difficulty in staffing and managing foreign operations;
- difficulties attracting customers in new jurisdictions;
- difficulties establishing international manufacturing
operations, including difficulties establishing relationships with
or establishing localized supplier bases and developing
cost-effective and reliable supply chains for such manufacturing
operations;
- taxes, regulations and permit requirements, including taxes
imposed by one taxing jurisdiction that Polestar may not be able to
offset against taxes imposed upon it by another relevant
jurisdiction, and foreign tax and other laws limiting its ability
to repatriate funds to another relevant jurisdiction;
- fluctuations in foreign currency exchange rates and interest
rates, including risks related to any forward currency contracts,
interest rate swaps or other hedging activities Polestar undertakes
and changes in the value of certain currencies relative to other
currencies, including shifts in the Chinese Yuan, U.S. Dollar and
Swedish Krona;
- United States, European Union and other and foreign government
trade restrictions, tariffs and price or exchange controls;
- foreign labour laws, regulations and restrictions;
- changes in diplomatic and trade relationships, including
political risk and customer perceptions based on such changes and
risks;
- political instability, natural disasters, climate change,
environmental conditions, pandemics, war or events of terrorism;
and
- the strength of international economies.
For example, many of Polestar’s vehicles are manufactured in
China. The European Union has recently announced that they are
investigating whether battery electric vehicle manufacturers in
China receive or benefit from state subsidies in China. This
investigation may result in higher import tariffs on Polestar’s
vehicles. Additionally, the newest Polestar manufacturing facility
in Charleston, South Carolina and a future anticipated facility
(which are owned and operated by Polestar’s manufacturing partners)
as well as any potential future facilities, are anticipated to
reduce the risk of higher import or custom duties in the US. If
these manufacturing facilities do not ramp up as expected, Polestar
will rely more heavily on imported inventory from China and its
vehicles may be subject to higher tariffs.
In addition to the above risks, Polestar may be impacted by the
upcoming enactment of Sweden’s new foreign direct investment
(“FDI”) regime. The reintroduction of this FDI regime will go into
effect on December 1, 2023 and includes, among other items, a
mandatory filing obligation for investors of, and a required
authorization for implementation of investments in, companies that
are located in Sweden and that are engaged in certain sensitive
industries, sectors, and activities. It is currently unclear
whether Polestar will ultimately be affected. Due to the novelty of
the regime and the evolving nature of FDI-related matters, Polestar
cannot definitively state that it will not be directly or
indirectly impacted by the new Swedish FDI regime. If Polestar is
ultimately directly or indirectly impacted by Sweden’s new FDI
regime, it may have a materially negative impact on its business,
results of operations and financial condition.
The ongoing conflicts between Russia and Ukraine and in
Israel and the Gaza Strip have, and are likely to continue to,
generate uncertain geopolitical conditions, including sanctions,
economic boycotts, and divestment initiatives that could adversely
affect Polestar’s business prospects and results of
operations.
Russia and Ukraine are not Polestar markets, and there are no
plans to launch in either market in the near future. However,
Israel is a Polestar market and Polestar has some suppliers with
operations in Israel. The uncertain geopolitical conditions,
sanctions, and other potential impacts on the global economic
environment resulting from Russia’s invasion of Ukraine and the
recent escalation in the conflict between Hamas and Israel may
weaken demand for Polestar’s vehicles and impact its ability to
access production components, which could make it difficult for
Polestar to forecast its financial results and manage its inventory
levels. Polestar has suppliers in Israel, including Mobileye and
StoreDot. If the conditions in Israel interrupt Polestar’s
suppliers’ operations or limit the ability for Polestar’s suppliers
to operate, Polestar’s business can be harmed. Additionally, in the
past, Israel and Israeli companies have been, and continue to be,
subject to economic boycotts and divestment initiatives, which
could negatively impact Polestar’s business given Polestar’s
relationship with Mobileye and StoreDot. The uncertainty
surrounding these conditions and the current, and potentially
expanded, scope of international sanctions against Russia may cause
unanticipated changes in customers’ buying patterns or may
adversely impact operations of Polestar's suppliers. Sanctions have
also created supply constraints and driven inflation that has
impacted, and may continue to impact, Polestar’s operations and
could create or exacerbate risks facing Polestar’s business.
Polestar vehicles are manufactured at facilities owned and
operated by Volvo Cars. While Polestar understands that Volvo Cars
does not have any “Tier 1” suppliers from Russia, car production is
a complex process, with thousands of components sourced from all
over the world. There can be no assurance, therefore, that there
will not be some components sourced from suppliers subject to
sanctions against Russia nor that the resulting disruption to the
supply chain will not have an adverse impact on Polestar's business
and results of operations and financial condition.
In the event geopolitical tensions deteriorate further or fail
to abate, additional governmental sanctions may be enacted that
could adversely impact the global economy, banking and monetary
systems, markets, and the operations of Polestar and its
suppliers.
If Polestar fails to successfully address these risks, its
business, prospects, results of operations and financial condition
could be materially harmed.
__________________________ 1 The period over period numeric and
percentage variances discussed below, related to the key unaudited
financial results, are calculated using the financial statements in
Appendix A as a base.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231108507023/en/
Bojana Flint Head of Investor Relations
bojana.flint@polestar.com
Theo Kjellberg Head of Corporate PR
theo.kjellberg@polestar.com
Tanya Ridd Global Head of Communications & PR
tanya.ridd@polestar.com
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