Core Viewpoint - Polestar has secured a $200 million equity investment from PSD Investment, which is controlled by Geely's chairman, Eric Li, leading to a 4.85% increase in its stock price and a market capitalization of approximately $2.3 billion [2]. Investment Details - The investment will be executed through a private investment in public equity (PIPE) transaction, involving the sale of 190 million newly issued Class A American Depositary Shares (ADS) at a price of $1.05 per share [2]. - Following this transaction, PSD Investment's stake in Polestar will rise to 44%, while Geely's total ownership will increase to 66% [2]. Company Background - Polestar, headquartered in Gothenburg, Sweden, focuses on high-performance electric vehicles and has faced challenges in its development since its inception [4]. - From 2020 to 2023, Polestar's global sales totaled 145,300 units, with cumulative losses of $2.016 billion during 2021 to 2023 [4]. Market Position and Strategy - Polestar has struggled with brand positioning, initially targeting the high-end market but later shifting towards a more mainstream approach, leading to inconsistent market presence [5]. - The company plans to focus on the European market, which is expected to account for 75% of its total sales in 2024, while also reducing its operations in China [7][8]. Financial Challenges - Polestar's monthly cash burn is estimated at $100 million to $200 million, making the recent $200 million investment insufficient for long-term sustainability [9]. - The company has accumulated approximately $4.4 billion in total debt, with $800 million in loans due by the end of the year [8][9].

Core Viewpoint - The global electric vehicle market is entering a highly competitive phase, with Polestar receiving a significant $200 million investment from PSD Investment, which will support its product development, technological innovation, and market expansion [1][3]. Investment Details - Polestar has sold approximately 190.5 million new Class A American Depositary Shares (ADS) at $1.05 per share to PSD Investment, which is controlled by Li Shufu and already a shareholder of Polestar [1][3]. - After the transaction, Li Shufu will hold 66% of Polestar through PSD Investment and Geely's Swedish subsidiary, while Volvo's stake will decrease from 18% to 16% [3]. Market Positioning - Polestar aims to establish itself as a high-end electric vehicle brand focused on performance and design, differentiating itself from competitors that emphasize technology or cost-effectiveness [3][5]. - The brand faces intense competition from Tesla, traditional luxury brands like BMW and Mercedes, and domestic Chinese electric vehicle manufacturers [5][6]. Competitive Challenges - Tesla's Model 3 and Model Y dominate the market with strong brand loyalty and cost advantages, while traditional luxury brands are accelerating their electric transitions [5][6]. - Polestar's close relationship with Volvo may blur its brand identity, making it crucial to communicate its unique value proposition effectively [6][9]. Financial Health - Polestar's financial situation is concerning, with a projected global retail sales decline from 54,600 units in 2023 to 44,458 units in 2024, representing an 18% decrease [8]. - Revenue for the first three quarters of 2024 is expected to be $1.457 billion, down 21% from $1.846 billion in the same period of 2023, with a net loss of $863 million [8][9]. Strategic Importance of Funding - The $200 million funding is critical for Polestar to enhance brand awareness, strengthen marketing communication, and support the launch of new models like Polestar 3 and Polestar 4 [6][9]. - This financing is seen as a lifeline rather than a long-term solution, as Polestar must quickly improve its cash flow and gross margins to avoid a cycle of continuous fundraising [9][10]. Product Strategy - Polestar's product strategy includes a comprehensive lineup from the now-discontinued Polestar 1 to the upcoming Polestar 3 and Polestar 4, but it currently lacks a competitive edge in core electric vehicle technologies [12][13]. - The brand's reliance on the Polestar 2 model has made it vulnerable, especially in the Chinese market where it struggles to gain traction [12][13]. Market Environment - The global electric vehicle market is experiencing a slowdown in growth, with a shift from policy-driven to product-driven demand, leading to increased competition and price wars [13][15]. - Polestar is sensitive to global trade dynamics, including EU investigations into Chinese electric vehicles and US-China trade tensions, which could impact its global strategy [15][16]. Conclusion - The $200 million investment is a crucial step for Polestar, providing necessary resources to navigate a challenging market landscape, but it is not a guarantee of success [16].

Core Viewpoint - Polestar Automotive announced a $200 million equity investment from existing investor PSD Investment Limited, controlled by Li Shufu, founder and chairman of Geely Holding Group [1] Investment Details - The investment will be executed through a private investment in public equity (PIPE) transaction, where Polestar will issue 190,476,190 Class A American Depositary Shares (ADS) at a price of $1.05 each, totaling $200 million [1] - Prior to the transaction completion, PSD Investment plans to convert its 20 million Class B ADS into Class A ADS to maintain its voting rights below 50% [1]

PART I [ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS](index=5&type=section&id=ITEM%201.%20IDENTITY%20OF%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20ADVISERS) This section is not applicable as per the report - The report states that this item is not applicable[72](index=72&type=chunk) [ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE](index=5&type=section&id=ITEM%202.%20OFFER%20STATISTICS%20AND%20EXPECTED%20TIMETABLE) This section is not applicable as per the report - The report states that this item is not applicable[73](index=73&type=chunk) [ITEM 3. KEY INFORMATION](index=5&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section outlines the significant risks facing Polestar, categorized into business and industry, cybersecurity, personnel, litigation, intellectual property, tax, financing, and security ownership [Risk Factors](index=11&type=section&id=D.%20Risk%20Factors) Polestar's business is subject to numerous significant risks, including dependence on new models, strategic partners, and the need for additional capital, leading to a going concern warning - The company has determined there is substantial doubt about its ability to continue as a going concern, as it is highly leveraged and requires additional capital to support its operations, liquidity, and growth[133](index=133&type=chunk) - Polestar's future growth is heavily dependent on the successful production and sale of its new vehicle models (Polestar 3 and 4) on schedule and within anticipated cost and pricing structures[86](index=86&type=chunk)[90](index=90&type=chunk) - The company relies significantly on strategic partners, particularly Volvo Cars and Geely, for manufacturing, R&D, intellectual property, and supply chain management, exposing it to risks if these partnerships are disrupted[105](index=105&type=chunk)[107](index=107&type=chunk) - Polestar has identified material weaknesses in its internal control over financial reporting related to control environment, control activities, and information/communication, which could lead to errors in financial reporting[84](index=84&type=chunk)[307](index=307&type=chunk) - The company faces significant risks from international trade policies, including recently imposed U.S. and E.U. tariffs on Chinese-made electric vehicles, which could increase costs or reduce margins[151](index=151&type=chunk)[152](index=152&type=chunk) - Polestar's dual-class voting structure, with Class B shares holding **10 votes each**, gives significant control to major shareholders like PSD Investment Limited, potentially limiting the influence of Class A shareholders[314](index=314&type=chunk)[315](index=315&type=chunk) [ITEM 4. INFORMATION ON THE COMPANY](index=43&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) This section details Polestar's history, business model, and operational structure, highlighting its asset-light approach through strategic partnerships [History and Development of the Company](index=43&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) Polestar Automotive Holding UK PLC was incorporated in England and Wales in 2021, becoming a public limited company in 2022, with increasing capital expenditures for R&D and production tooling Capital Expenditures (USD in millions) | Year | Amount (USD) | | :--- | :--- | | 2024 | $540.8 million | | 2023 | $555.3 million | | 2022 | $416.5 million | - The company consummated its Business Combination with GGI on June 23, 2022, which included a Pre-Closing Reorganization making Polestar Singapore and Polestar Sweden wholly owned subsidiaries[344](index=344&type=chunk) - Capital expenditures are expected to increase in the near term to support investment in intellectual property, unique tooling, and equipment, financed through equity, debt, and credit facilities[347](index=347&type=chunk) [Business Overview](index=43&type=section&id=B.%20Business%20Overview) Polestar is a premium electric performance car brand leveraging an asset-light model through partnerships to expand its vehicle lineup and global presence, focusing on sustainability and cost discipline Revenue by Type (USD in thousands) | Revenue Type | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Sales of vehicles | $1,975,864 | $2,313,124 | $2,386,685 | | Sales of software and performance engineered kits | $15,344 | $18,994 | $21,308 | | Sales of carbon credits | $10,918 | $1,452 | $10,984 | | Vehicle leasing revenue | $17,175 | $17,421 | $16,719 | | Other revenue | $14,960 | $17,094 | $5,122 | | **Total** | **$2,034,261** | **$2,368,085** | **$2,440,818** | Revenue by Geographical Region (USD in thousands) | Region | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Europe, the Middle East, and Africa | $1,569,007 | $1,661,483 | $1,591,706 | | North America | $296,911 | $517,289 | $599,931 | | Asia and Australia | $168,343 | $189,313 | $249,181 | | **Total** | **$2,034,261** | **$2,368,085** | **$2,440,818** | - Polestar is accelerating its transition to an active selling model, expanding its retail presence, and optimizing its manufacturing footprint (USA, China, South Korea) to minimize tariff impacts[369](index=369&type=chunk)[370](index=370&type=chunk) - As of December 31, 2024, Polestar operated in **27 markets** with **193 Polestar Spaces**, **175 Sales Points**, and access to **1,170 service points** through the Volvo Cars network[360](index=360&type=chunk) - The company has a goal to create a truly climate-neutral car by **2030** (Polestar 0 project) and become a climate-neutral company by **2040**[354](index=354&type=chunk)[421](index=421&type=chunk) [Organizational Structure](index=59&type=section&id=C.%20Organizational%20Structure) The report illustrates the company's organizational structure, with Polestar Automotive Holding UK PLC as the parent and key wholly-owned subsidiaries in Sweden and Singapore - The company's structure consists of the UK-based parent, Polestar Automotive Holding UK PLC, with significant operating subsidiaries in Sweden and Singapore[497](index=497&type=chunk)[502](index=502&type=chunk) - A comprehensive list of significant subsidiaries is provided, detailing their jurisdiction of incorporation and the company's **100% ownership stake** in each[501](index=501&type=chunk)[502](index=502&type=chunk) [Property, Plants and Equipment](index=62&type=section&id=D.%20Property%2C%20Plants%20and%20Equipment) Polestar operates with an asset-light model, utilizing manufacturing facilities owned by partners Volvo Cars and Geely, with headquarters in Gothenburg, Sweden, and R&D in Coventry, UK - Polestar 2 is produced at the Volvo Cars-owned Taizhou facility[505](index=505&type=chunk) - Polestar 3 is manufactured at Volvo Cars' facilities in Charleston, South Carolina (for US/EU markets) and Chengdu, China[506](index=506&type=chunk) - Polestar 4 is produced at the Geely-owned Hangzhou Bay plant and will also be manufactured in Busan, South Korea, starting in the second half of 2025[507](index=507&type=chunk) - Polestar 5 is expected to be produced at the Geely-owned Chongqing plant, with production starting in the second half of 2025[508](index=508&type=chunk) [ITEM 4A. UNRESOLVED STAFF COMMENTS](index=63&type=section&id=ITEM%204A.%20UNRESOLVED%20STAFF%20COMMENTS) This section is not applicable as per the report - The report states that this item is not applicable[516](index=516&type=chunk) [ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS](index=63&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) This section provides a detailed analysis of Polestar's financial performance and condition, highlighting a **14% revenue decrease** in 2024, a widening net loss, and ongoing liquidity challenges Consolidated Statement of Loss (USD in thousands) | | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Revenue | 2,034,261 | 2,368,085 | 2,440,818 | | Gross (loss) profit | (876,167) | (410,137) | 101,122 | | Operating loss | (1,813,311) | (1,469,514) | (1,286,568) | | Net loss | (2,049,897) | (1,181,875) | (479,017) | - Revenue for 2024 decreased by **14%** to **$2.03 billion**, primarily due to lower sales volumes of the Polestar 2 and delays in the sales ramp-up of new car lines, partially offset by a better sales mix with the introduction of the higher-priced Polestar 3 and 4[565](index=565&type=chunk)[567](index=567&type=chunk)[571](index=571&type=chunk) - Cost of sales increased by **5%** in 2024, driven by a **$282.5 million** increase in impairment charges, despite lower inventory costs from reduced sales volumes[573](index=573&type=chunk) - The company recognized significant impairment charges in 2024 totaling **$622.1 million**, primarily related to assets for the Polestar 3, 5, and 6, due to decreased forecasts for pricing and demand[170](index=170&type=chunk)[1288](index=1288&type=chunk) - Polestar continues to face liquidity risk and has a going concern warning, relying on short-term and long-term debt from credit institutions and related parties (Volvo Cars, Geely) to fund its operations and investments[591](index=591&type=chunk)[592](index=592&type=chunk) [Results of Operations](index=66&type=section&id=A.%20Results%20of%20operations) In fiscal year 2024, Polestar's revenue decreased by **14%** to **$2.03 billion**, while gross loss widened significantly to **$876.2 million** due to impairment charges, resulting in a net loss of **$2.05 billion** Key Operational Metrics | Key metrics | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Retail sales (units) | 44,851 | 52,796 | 50,510 | | Markets | 27 | 27 | 27 | | Spaces | 193 | 192 | 158 | | Sales Points | 175 | 153 | 99 | | Service points | 1,170 | 1,149 | 1,116 | Revenue Breakdown (USD in thousands) | Revenue Type | 2024 | 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Sales of vehicles | 1,975,864 | 2,313,124 | (15%) | | Sales of software and performance engineered kits | 15,344 | 18,994 | (19%) | | Sales of carbon credits | 10,918 | 1,452 | 652% | | Vehicle leasing revenue | 17,175 | 17,421 | (1%) | | Other revenue | 14,960 | 17,094 | (12%) | | **Total Revenue** | **2,034,261** | **2,368,085** | **(14%)** | - Gross loss for 2024 was **$876.2 million**, a significant increase from the **$410.1 million** gross loss in 2023, primarily due to higher impairment charges and lower revenues[575](index=575&type=chunk) - R&D expenses decreased by **76%** in 2024 to **$38.4 million**, mainly due to a change in accounting for amortization of certain IP, which is now capitalized into inventory rather than expensed to R&D[579](index=579&type=chunk) [Liquidity and Capital Resources](index=71&type=section&id=B.%20Liquidity%20and%20capital%20resources) Polestar's liquidity is under significant pressure, with a material uncertainty about its ability to continue as a going concern, relying heavily on debt financing from related parties and credit institutions - Management has identified a material uncertainty that casts significant doubt on the company's ability to continue as a going concern due to its need for additional financing[591](index=591&type=chunk)[1166](index=1166&type=chunk) Cash Flow Summary (USD in thousands) | Cash Flow Activity | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Cash used for operating activities | (991,209) | (1,893,841) | (1,080,951) | | Cash used for investing activities | (412,562) | (417,619) | (709,044) | | Cash provided by financing activities | 1,424,192 | 2,104,361 | 2,074,161 | - As of December 31, 2024, Polestar had cash and cash equivalents of **$739.2 million**, compared to **$768.3 million** at the end of 2023[593](index=593&type=chunk) - The company has significant debt facilities, including a **$1 billion** term loan from Volvo Cars (Snita) and a **$250 million** term loan from Geely, both with optional equity conversion features[606](index=606&type=chunk)[607](index=607&type=chunk)[608](index=608&type=chunk) - Polestar's non-current syndicated loan is subject to financial covenants, including minimum revenue and cash levels, for which lenders waived and amended certain covenants for the 2024 fiscal year[603](index=603&type=chunk) [ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES](index=77&type=section&id=ITEM%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section details Polestar's leadership, compensation, board structure, and employee numbers, noting recent CEO and CFO appointments and the absence of 2024 bonuses - Michael Lohscheller was appointed CEO and Jean-François Mady was appointed CFO in October 2024, marking a significant change in senior leadership[652](index=652&type=chunk)[654](index=654&type=chunk) - Aggregate compensation for executive officers for the year ended December 31, 2024, was approximately **36.8 million SEK** (or **$3.36 million USD**)[677](index=677&type=chunk) - No bonus was paid out under the 2024 Polestar Bonus Program due to the company's financial situation, despite meeting some performance targets[679](index=679&type=chunk) - The Board is classified into three classes (I, II, III) with staggered three-year terms, and as of year-end 2024, seven of the ten directors qualified as independent under Nasdaq rules[740](index=740&type=chunk)[741](index=741&type=chunk) - As of December 31, 2024, the company had over **2,547 employees**, primarily located in Sweden, China, the UK, and the USA[763](index=763&type=chunk) [ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](index=90&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section details Polestar's ownership structure, with Li Shufu as the ultimate beneficial owner of approximately **81.8%** of shares, and extensive operational and financial agreements with Volvo Cars and Geely - As of December 31, 2024, Li Shufu is the ultimate beneficial owner of approximately **81.8%** of Polestar's outstanding shares through his control of PSD Investment Limited and Geely, which in turn has a majority stake in Volvo Cars[774](index=774&type=chunk)[776](index=776&type=chunk) - Polestar has a **$1 billion** term loan facility with Snita (a Volvo Cars subsidiary), with a maturity date extended to December 29, 2028[790](index=790&type=chunk)[791](index=791&type=chunk) - The company also has a **$250 million** term loan facility with Geely Sweden Automotive Investment AB, maturing on June 30, 2027[792](index=792&type=chunk) - Polestar has a vast number of operational agreements with Volvo Cars and Geely for services including R&D, IP licensing, procurement, manufacturing engineering, logistics, and customer service, which are crucial to its asset-light model[448](index=448&type=chunk)[449](index=449&type=chunk)[451](index=451&type=chunk) - In April 2025, Polestar terminated its joint venture with Xingji Meizu in China, transferring PRC distribution rights back to Polestar to resume direct control over sales and service in the Chinese market[438](index=438&type=chunk) [ITEM 8. FINANCIAL INFORMATION](index=109&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section confirms that the consolidated financial statements are provided under Item 18 and states that the company does not intend to pay cash dividends in the foreseeable future - The company's audited consolidated financial statements are included in Item 18 of this report[935](index=935&type=chunk) - Polestar has not paid any cash dividends and does not plan to in the foreseeable future, intending to reinvest earnings for operational expansion[937](index=937&type=chunk) [ITEM 9. THE OFFER AND LISTING](index=109&type=section&id=ITEM%209.%20THE%20OFFER%20AND%20LISTING) This section provides details on the company's stock listing, with Polestar's Class A and Class C-1 American Depositary Shares listed on Nasdaq under 'PSNY' and 'PSNYW' respectively - Class A ADSs are listed on Nasdaq under the symbol 'PSNY'[941](index=941&type=chunk) - Class C-1 ADSs are listed on Nasdaq under the symbol 'PSNYW'[941](index=941&type=chunk) [ITEM 10. ADDITIONAL INFORMATION](index=110&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section provides supplementary information, including references to corporate documents, confirmation of no exchange controls in England and Wales, and U.S. and U.K. tax considerations for ADS holders - The company's Articles of Association and other material contracts are filed as exhibits to the report[949](index=949&type=chunk)[950](index=950&type=chunk) - There is no exchange control legislation in England or Wales that affects the company[955](index=955&type=chunk) - Based on its income and asset composition, the company does not believe it was a Passive Foreign Investment Company (PFIC) for the 2024 taxable year but notes that this is subject to uncertainty and no assurance can be given for future years[988](index=988&type=chunk) - The company does not believe it should be treated as a U.S. corporation for U.S. federal tax purposes under Section 7874 of the Code as a result of the business combination[962](index=962&type=chunk) [ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=117&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section states that Polestar is exposed to market risks, including foreign exchange risk, interest rate risk, credit risk, and liquidity risk, with detailed analyses provided in the financial statements - The company is exposed to market risks such as foreign exchange, interest rate, credit, and liquidity risk[1007](index=1007&type=chunk) - Detailed discussion and sensitivity analyses of these risks are provided in Note 3 to the Consolidated Financial Statements[1007](index=1007&type=chunk) [ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES](index=117&type=section&id=ITEM%2012.%20DESCRIPTION%20OF%20SECURITIES%20OTHER%20THAN%20EQUITY%20SECURITIES) This section details the fees and charges applicable to holders of the company's American Depositary Shares (ADSs), including issuance, cancellation, and distribution fees ADS Holder Fees and Charges | Service | Fees | | :--- | :--- | | Issuance of ADSs | Up to US$0.05 per ADS issued | | Cancellation of ADSs | Up to US$0.05 per ADS cancelled | | Distribution of cash dividends | Up to US$0.05 per ADS held | | Distribution of ADSs (stock dividends, etc.) | Up to US$0.05 per ADS held | | ADS Services (annual fee) | Up to US$0.05 per ADS held on record date | | Registration of ADS transfers | Up to US$0.05 per ADS transferred | | Conversion of ADS series | Up to US$0.05 per ADS converted | - ADS holders are also responsible for paying taxes (including stamp duty or SDRT), registration fees, and other out-of-pocket expenses incurred by the Depositary[1015](index=1015&type=chunk) PART II [ITEM 13. DEFAULTS, DIVIDENDS ARREARAGES AND DELINQUENCIES](index=120&type=section&id=ITEM%2013.%20DEFAULTS%2C%20DIVIDENDS%20ARREARAGES%20AND%20DELINQUENCIES) This section is not applicable as per the report - The report states that this item is not applicable[1020](index=1020&type=chunk) [ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS](index=120&type=section&id=ITEM%2014.%20MATERIAL%20MODIFICATIONS%20TO%20THE%20RIGHTS%20OF%20SECURITY%20HOLDERS%20AND%20USE%20OF%20PROCEEDS) This section is not applicable as per the report - The report states that this item is not applicable[1021](index=1021&type=chunk) [ITEM 15. CONTROLS AND PROCEDURES](index=120&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and procedures were not effective as of December 31, 2024, due to material weaknesses in internal control over financial reporting - Management concluded that disclosure controls and procedures were not effective as of December 31, 2024, due to material weaknesses in internal control over financial reporting[1022](index=1022&type=chunk) - Material weaknesses were identified in three COSO components: Control Environment (insufficient finance expertise), Control Activities (multiple areas including revenue, inventory, and impairment), and Information & Communication (ineffective IT general controls)[1030](index=1030&type=chunk)[1031](index=1031&type=chunk)[1034](index=1034&type=chunk) - The independent registered public accounting firm, Deloitte AB, issued an adverse opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2024[1041](index=1041&type=chunk)[1042](index=1042&type=chunk) - While the company remediated two material weaknesses from the prior year (related to monitoring and HR system controls), several others remain, and remediation efforts were hindered by financial restatements, workforce reductions, and leadership changes[1024](index=1024&type=chunk)[1025](index=1025&type=chunk)[1026](index=1026&type=chunk) [ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT](index=124&type=section&id=ITEM%2016A.%20AUDIT%20COMMITTEE%20FINANCIAL%20EXPERT%20COPY) The Board of Directors has determined that Christine Gorjanc qualifies as an 'audit committee financial expert' as defined by SEC rules and is independent under Nasdaq listing rules - The Board has identified Christine Gorjanc as the 'audit committee financial expert'[1057](index=1057&type=chunk) [ITEM 16B. CODE OF ETHICS](index=124&type=section&id=ITEM%2016B.%20CODE%20OF%20ETHICS) The company has adopted a code of conduct applicable to all directors, officers, and employees, covering ethical standards, conflicts of interest, legal compliance, and confidentiality - Polestar has adopted a code of conduct for all directors, officers, and employees, which is available on its website[1058](index=1058&type=chunk) [ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES](index=124&type=section&id=ITEM%2016C.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Deloitte AB served as Polestar's principal external auditor for 2024 and 2023, with total fees billed approximately **$15.9 million** in 2024, primarily for audit services Principal Accountant Fees (USD in thousands) | Fee Type | 2024 | 2023 | | :--- | :--- | :--- | | Audit fees | 15,746 | 15,720 | | Audit-related fees | 200 | 268 | | Tax fees | — | 3 | | All other fees | — | 10 | | **Total** | **$15,946** | **$16,001** | - The Audit Committee pre-approves all audit and permissible non-audit services provided by Deloitte AB[1061](index=1061&type=chunk) [ITEM 16G. CORPORATE GOVERNANCE](index=125&type=section&id=ITEM%2016G.%20CORPORATE%20GOVERNANCE) As a foreign private issuer and a controlled company, Polestar is exempt from certain Nasdaq corporate governance requirements, utilizing exemptions for committee independence - Polestar is a foreign private issuer and is exempt from certain Nasdaq corporate governance rules[1066](index=1066&type=chunk) - The company avails itself of exemptions related to the independence of its compensation and nominating/governance committees[1066](index=1066&type=chunk) - As a controlled company, Polestar may also elect not to comply with requirements for a majority-independent board, though it currently does so under its Articles[1069](index=1069&type=chunk)[1073](index=1073&type=chunk) [ITEM 16J. INSIDER TRADING POLICIES](index=125&type=section&id=ITEM%2016J.%20INSIDER%20TRADING%20POLICIES) The company has adopted an Insider Trading Policy to promote compliance with insider trading laws, prohibiting trading on material, nonpublic information and establishing blackout periods - Polestar has an Insider Trading Policy to prevent trading on material, nonpublic information by its directors, officers, and employees[1072](index=1072&type=chunk) [ITEM 16K. CYBERSECURITY](index=126&type=section&id=ITEM%2016K.%20CYBERSECURITY) Polestar has established a cybersecurity risk management program overseen by the Audit Committee, with a dedicated Security Team and 24/7 monitoring, acknowledging potential material impacts from threats - The Audit Committee oversees cybersecurity risk management, receiving reports from the CISO/CSO at least twice a year[1079](index=1079&type=chunk) - A unified security organization under a CISO/CSO manages information security, product cybersecurity, and corporate security[1080](index=1080&type=chunk)[1081](index=1081&type=chunk) - The company uses a managed security service provider (MSSP) for 24/7 security monitoring of its enterprise and vehicle fleet systems[1076](index=1076&type=chunk) - No material cybersecurity incidents were experienced during the last fiscal year, but the company acknowledges that such risks could materially affect future operations[1077](index=1077&type=chunk)[1078](index=1078&type=chunk) PART III [ITEM 17. FINANCIAL STATEMENTS](index=126&type=section&id=ITEM%2017.%20FINANCIAL%20STATEMENTS) The company has elected to provide financial statements pursuant to Item 18 - The company provides financial statements under Item 18, which typically offers more comprehensive disclosure than Item 17[1085](index=1085&type=chunk) [ITEM 18. FINANCIAL STATEMENTS](index=127&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) This section contains Polestar's audited consolidated financial statements, highlighting a 'going concern' uncertainty, an adverse opinion on internal controls, and a **$2.05 billion** net loss in 2024 - The independent auditor's report includes an explanatory paragraph regarding substantial doubt about the company's ability to continue as a going concern[1131](index=1131&type=chunk) - The auditor issued an adverse opinion on the company's internal control over financial reporting as of December 31, 2024, due to identified material weaknesses[1130](index=1130&type=chunk) Consolidated Statement of Financial Position (Assets - USD in thousands) | | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total non-current assets | 1,756,023 | 2,019,452 | | Total current assets | 2,298,327 | 2,272,758 | | **Total assets** | **4,054,350** | **4,292,210** | Consolidated Statement of Financial Position (Equity & Liabilities - USD in thousands) | | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total equity | 3,328,560 | 1,250,991 | | Total non-current liabilities | (2,641,976) | (1,920,617) | | Total current liabilities | (4,740,934) | (3,622,584) | | **Total equity and liabilities** | **(4,054,350)** | **(4,292,210)** | [ITEM 19. EXHIBITS](index=128&type=section&id=ITEM%2019.%20EXHIBITS) This section provides an index of all exhibits filed with the annual report, including corporate documents, securities agreements, material contracts with related parties, and CEO/CFO certifications - The exhibit index lists key corporate governance documents, including the Articles of Association (Exhibit 1.1) and various ADS Deposit Agreements (Exhibits 2.1, 2.3, 2.5)[1088](index=1088&type=chunk) - Numerous material contracts are filed as exhibits, including the Business Combination Agreement (Exhibit 4.1) and a wide range of service, license, and manufacturing agreements with related parties like Volvo Cars and Geely[1090](index=1090&type=chunk)[1092](index=1092&type=chunk) - Certifications by the Principal Executive Officer and Principal Financial Officer pursuant to Sarbanes-Oxley Sections 302 and 906 are included as exhibits (Exhibits 12.1, 12.2, 13.1, 13.2)[1121](index=1121&type=chunk)

Core Viewpoint - Polestar's termination of its joint venture with Geely's Meizu marks a significant shift, indicating a potential exit from the Chinese market due to poor performance and strategic misalignment [1][2]. Group 1: Company Performance - In 2024, Polestar's sales in China were only 3,100 units, plummeting to 119 units in January-February 2025, far below Geely's expectations [3]. - Polestar's global sales reached 12,304 units in Q1 2025, a 76% year-on-year increase, primarily driven by the European market, which accounted for nearly 70% of total sales [3]. - The company's net loss expanded to $541 million in the first half of 2024, with cumulative losses exceeding $2 billion, and its stock price has fallen by 90% since its IPO, leading to multiple delisting warnings from Nasdaq [3]. Group 2: Strategic Challenges - Polestar's product lineup is limited, with only two models available, and its pricing does not compete effectively with brands like NIO and Li Auto [1]. - The company has faced significant management instability, with seven different heads for the China region in eight years, leading to a lack of strategic continuity [1]. - Geely has been consolidating its brands, closing underperforming ones and reallocating resources to more promising brands like Zeekr and Galaxy, further marginalizing Polestar [3][4]. Group 3: Future Outlook - Polestar plans to launch the four-door GT model Polestar 5 and the compact SUV Polestar 7 in late 2025, aiming for an annual sales growth of 30%-35% [4]. - However, the company’s product iteration speed lags behind Chinese competitors, and its brand recognition outside Europe is weak, raising doubts about its ability to reverse its current decline [4]. - If Polestar fails to solidify its position in the European market and achieve profitability by 2025, it may face severe survival challenges [4].

Core Viewpoint - Polestar Automotive announced the termination of the framework agreement with Meizu, leading to the cessation of operations for their joint venture, Polestar Technology [1] Group 1 - The joint venture will be responsible for settling all outstanding financial obligations and remaining debts to business partners, including external investors, before ceasing operations [1] - The agreement includes terms for the transfer of certain digital and other assets of the joint venture at a fair value agreed upon by both parties, ensuring Polestar can resume sales, customer service, and distribution in the Chinese market [1]

PART I [Key Information](index=6&type=section&id=ITEM%203.%20KEY%20INFORMATION) The company faces significant risks related to partner dependency, capital needs, competition, and internal control weaknesses [Risk Factors](index=16&type=section&id=D.%20Risk%20Factors) Key risks include heavy reliance on strategic partners, the need for substantial additional capital, intense market competition, and identified material weaknesses in financial controls - Polestar's future growth is **heavily dependent on the successful and timely production of new models** like the Polestar 3 and 4[47](index=47&type=chunk) - The company's **reliance on partners like Volvo Cars and Geely** for manufacturing, R&D, and logistics creates significant operational vulnerabilities[50](index=50&type=chunk) - Polestar has incurred net losses since inception, requires substantial additional capital, and has **substantial doubt about its ability to continue as a going concern**[54](index=54&type=chunk)[55](index=55&type=chunk) - The company has identified **material weaknesses in its internal control over financial reporting**, which could impact financial statement accuracy and investor confidence[88](index=88&type=chunk) - A **dual-class voting structure** gives certain shareholders disproportionate voting power, limiting the influence of other ADS holders[89](index=89&type=chunk) [Company Information](index=53&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) This section details Polestar's history, asset-light business model, global operations, and expanding electric vehicle portfolio [History and Development of the Company](index=53&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) Polestar became a public company in June 2022 and has made significant capital expenditures financed through equity, debt, and credit facilities Capital Expenditures (TUSD) | Year | Amount (TUSD) | | :--- | :--- | | 2023 | 475,710 | | 2022 | 380,709 | | 2021 | 503,308 | - The company was established as a premium electric car brand by Volvo Cars and Geely in 2017 and **became publicly listed on June 23, 2022**[99](index=99&type=chunk)[101](index=101&type=chunk) [Business Overview](index=54&type=section&id=B.%20Business%20Overview) Polestar is a design-led EV brand with an asset-light model, a direct-to-consumer approach, and a goal to create a climate-neutral car by 2030 - Polestar's strategy focuses on **expanding its product portfolio to four models by 2025**, improving profitability, and diversifying its manufacturing footprint[108](index=108&type=chunk) Vehicle Portfolio and Timeline | Model | Type | Status | Production Start | | :--- | :--- | :--- | :--- | | Polestar 1 | Hybrid GT | Production ended 2021 | 2019 | | Polestar 2 | Performance Fastback | In production | 2020 | | Polestar 3 | Performance SUV | Production started | Early 2024 | | Polestar 4 | SUV Coupe | Production started | Late 2023 | | Polestar 5 | Luxury 4-door GT | Planned | 2025 | | Polestar 6 | Roadster | Planned | Early 2027 | - As of December 31, 2023, Polestar operates in 27 markets, utilizing **192 Polestar Spaces** and over **1,150 service points** via the Volvo Cars network[101](index=101&type=chunk)[128](index=128&type=chunk) - A joint venture with Xingji Meizu in China aims to develop a **unique operating system (Polestar OS)** to strengthen its position in the Chinese market[59](index=59&type=chunk)[128](index=128&type=chunk) Revenue by Type (TUSD) | Revenue Type | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Sales of vehicles | 2,319,947 | 2,386,454 | 1,299,196 | | Sales of software and performance kits | 18,994 | 21,308 | 25,881 | | Sales of carbon credits | 1,452 | 10,984 | 6,299 | | Vehicle leasing revenue | 17,421 | 16,719 | 6,217 | | Other revenue | 20,748 | 8,640 | 8,754 | | **Total** | **2,378,562** | **2,444,105** | **1,346,347** | [Organizational Structure](index=69&type=section&id=C.%20Organizational%20Structure) Polestar Automotive Holding UK PLC is the parent company of a global group with key subsidiaries in Sweden and Singapore - The company operates through a network of wholly-owned subsidiaries across key regions, with **Polestar Holding AB (Sweden)** and **Polestar Automotive (Singapore) Pte. Ltd.** being central to the structure[155](index=155&type=chunk)[159](index=159&type=chunk) [Property, Plants and Equipment](index=71&type=section&id=D.%20Property,%20Plants%20and%20Equipment) The company employs an asset-light model by using partner-owned manufacturing facilities and is expanding its production footprint globally - Polestar **leverages partner manufacturing facilities** to maintain an asset-light business model[160](index=160&type=chunk)[161](index=161&type=chunk) Key Manufacturing Locations | Facility | Operator | Model(s) | Status | | :--- | :--- | :--- | :--- | | Taizhou, China | Volvo Cars | Polestar 2 | In Production | | Chengdu, China | Volvo Cars | Polestar 3 | Production started early 2024 | | Charleston, SC, USA | Volvo Cars | Polestar 3 | Production expected summer 2024 | | Hangzhou Bay, China | Geely | Polestar 4 | In Production | | Busan, South Korea | Renault Korea Motors (Geely JV) | Polestar 4 | Production expected H2 2025 | | Chongqing, China | Geely/Polestar | Polestar 5 & 6 | Production expected 2025/2027 | [Operating and Financial Review and Prospects](index=72&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) The company's financial performance shows declining revenue and widening losses, with significant doubt about its ability to continue as a going concern [Results of Operations](index=76&type=section&id=A.%20Results%20of%20operations) In 2023, revenue decreased slightly while a significant increase in cost of sales led to a gross loss of $413.1 million and a net loss of $1.19 billion Consolidated Statement of Loss (TUSD) | | 2023 | 2022 (Restated) | 2021 (Restated) | | :--- | :--- | :--- | :--- | | **Revenue** | **2,378,562** | **2,444,105** | **1,346,347** | | Cost of sales | (2,791,643) | (2,343,302) | (1,336,688) | | **Gross (loss) profit** | **(413,081)** | **100,803** | **9,659** | | Selling, general and administrative expense | (949,683) | (838,367) | (685,049) | | Research and development expense | (158,406) | (174,916) | (234,019) | | **Operating loss** | **(1,479,966)** | **(1,285,103)** | **(960,125)** | | **Net loss** | **(1,194,831)** | **(477,455)** | **(969,298)** | - Global vehicle deliveries **grew 6% to approximately 54,600 cars** in 2023 from 51,549 in 2022[106](index=106&type=chunk)[183](index=183&type=chunk) - The 2023 gross loss was primarily driven by **impairments totaling over $440 million** related to intangible assets, PPE, and inventory[202](index=202&type=chunk) [Liquidity and Capital Resources](index=81&type=section&id=B.%20Liquidity%20and%20capital%20resources) The company's liquidity is under pressure due to negative operating cash flows, requiring heavy reliance on external and related-party financing Cash and Cash Equivalents (TUSD) | As of December 31 | 2023 | 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | 768,927 | 973,877 | Consolidated Cash Flows (TUSD) | | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Cash used for operating activities | (1,859,842) | (1,089,295) | (314,555) | | Cash used for investing activities | (439,399) | (709,044) | (126,937) | | Cash provided by financing activities | 2,093,304 | 2,082,486 | 909,237 | - Polestar secured significant related-party financing, including a **$1 billion term loan from Volvo Cars** and a **$250 million term loan from Geely**[173](index=173&type=chunk)[217](index=217&type=chunk) - Total contractual obligations and commitments as of December 31, 2023, amount to approximately **$4.87 billion**, with $3.18 billion due in less than one year[227](index=227&type=chunk) [Critical Accounting Estimates](index=87&type=section&id=F.%20Critical%20accounting%20estimates) Financial statements rely on critical estimates for revenue recognition, asset impairment testing, and fair value measurements of financial instruments - Polestar **changed its revenue allocation method** in Q4 2023 to an expected cost-plus-margin approach, reflecting more mature sales data[239](index=239&type=chunk)[481](index=481&type=chunk) - The company identified **four distinct Cash Generating Units (CGUs)** for impairment testing, a change from the previous single-CGU approach[241](index=241&type=chunk)[506](index=506&type=chunk) - An **impairment loss of $351.2 million** was recognized for the Polestar 2 CGU in 2023 due to decreased forecasted demand[241](index=241&type=chunk)[506](index=506&type=chunk) - Fair value of financial liabilities is measured using complex models with **significant unobservable inputs (Level 2 and 3)**, making them sensitive to market changes[243](index=243&type=chunk)[244](index=244&type=chunk) [Directors, Senior Management and Employees](index=91&type=section&id=ITEM%206.%20DIRECTORS,%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section details the company's board structure, executive compensation, incentive plans, and employee base - The Board of Directors is divided into **three classes with staggered three-year terms**, and a majority must be independent for three years post-business combination[297](index=297&type=chunk) - Aggregate compensation for executive officers in 2023 was approximately **SEK 39.5 million (approx. $3.9 million USD)**[272](index=272&type=chunk) - Non-employee directors receive an annual fee of **$200,000 ($350,000 for the chair)**, with 50% of the net fee used to purchase company ADSs[280](index=280&type=chunk) - As of December 31, 2023, the company had over **2,515 employees**, with a significant presence in Sweden, China, the UK, and the USA[310](index=310&type=chunk) [Major Shareholders and Related Party Transactions](index=103&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) The company is a controlled entity with extensive operational and financial agreements with its major shareholders, Volvo Cars and Geely Major Shareholder Ownership (as of Dec 31, 2023) | Name of Beneficial Owner | Approximate Percentage of Outstanding Shares | | :--- | :--- | | Li Shufu | 81.8% | - Polestar has **extensive related party agreements** with Volvo Cars and Geely for R&D, IP licensing, manufacturing, and other core services[136](index=136&type=chunk)[326](index=326&type=chunk) - Polestar has a **$1 billion term loan facility with Snita (Volvo Cars)** and a **$250 million term loan facility with Geely**, both featuring equity conversion options[326](index=326&type=chunk)[327](index=327&type=chunk) [Financial Information](index=123&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section references the consolidated financial statements and notes the company's policy of not paying dividends - The company has not paid any cash dividends to date and **does not intend to in the foreseeable future**, expecting to reinvest earnings into operations[350](index=350&type=chunk) [The Offer and Listing](index=124&type=section&id=ITEM%209.%20THE%20OFFER%20AND%20LISTING) Polestar's ADSs and warrants are listed on the Nasdaq stock market under the symbols 'PSNY' and 'PSNYW' - Class A ADSs are listed on Nasdaq under the symbol **'PSNY'**[352](index=352&type=chunk) - Class C-1 ADSs (warrants) are listed on Nasdaq under the symbol **'PSNYW'**[352](index=352&type=chunk) [Additional Information](index=124&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section covers material tax considerations for ADS holders, including PFIC status, and notes the absence of exchange controls - The company does not believe it was a **Passive Foreign Investment Company (PFIC)** for the 2023 taxable year but notes the determination is complex[75](index=75&type=chunk)[371](index=371&type=chunk) - Dividends paid by the company are **not expected to be subject to U.K. withholding tax**[374](index=374&type=chunk) - Transfers of ADSs through DTC are not expected to attract U.K. stamp duty, but **transfers of the underlying ordinary shares generally will**[75](index=75&type=chunk)[375](index=375&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=131&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to market risks including foreign currency, interest rate, credit, and significant liquidity risk - The company is primarily exposed to **foreign exchange risk** from fluctuations in CNY/SEK, GBP/SEK, and USD/SEK rates[247](index=247&type=chunk)[528](index=528&type=chunk) - A **1% parallel shift in interest rate curves** would impact profit or loss by approximately **$10.0 million** as of Dec 31, 2023[251](index=251&type=chunk)[534](index=534&type=chunk) - **Liquidity risk is significant**, as the company depends on short-term credit facilities and flexible payment terms from related parties[255](index=255&type=chunk)[537](index=537&type=chunk) [Description of Securities Other Than Equity Securities](index=131&type=section&id=ITEM%2012.%20DESCRIPTION%20OF%20SECURITIES%20OTHER%20THAN%20EQUITY%20SECURITIES) This section outlines the fees payable by ADS holders to the Depositary for various services ADS Holder Fees | Service | Fee per ADS | | :--- | :--- | | Issuance of ADSs | Up to US$0.05 | | Cancellation of ADSs | Up to US$0.05 | | Cash distributions | Up to US$0.05 | | Annual Service Fee | Up to US$0.05 | PART II [Controls and Procedures](index=134&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) Management and the independent auditor identified material weaknesses in internal controls, resulting in an adverse opinion on their effectiveness - Management concluded that **disclosure controls and procedures were not effective** as of December 31, 2023[386](index=386&type=chunk) - The independent auditor, Deloitte AB, issued an **adverse opinion on the effectiveness of the company's internal control** over financial reporting[398](index=398&type=chunk)[399](index=399&type=chunk) - **Material weaknesses were identified** in four components of the COSO framework: Control Environment, Control Activities, Information and Communication, and Monitoring[389](index=389&type=chunk) - Specific deficiencies include a **lack of sufficient accounting expertise**, inadequate segregation of duties, and ineffective controls over key financial areas[390](index=390&type=chunk)[391](index=391&type=chunk)[394](index=394&type=chunk) - Management is undertaking **remediation efforts**, including hiring additional finance resources and enhancing policies and procedures[396](index=396&type=chunk) [Principal Accountant Fees and Services](index=138&type=section&id=ITEM%2016C.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) This section details the fees paid to the principal external auditor, Deloitte AB, for audit and other services in 2022 and 2023 Principal Accountant Fees (TUSD) | Fee Type | 2023 | 2022 | | :--- | :--- | :--- | | Audit fees | 15,720 | 11,159 | | Audit-related fees | 268 | 412 | | Tax fees | 3 | — | | All other fees | 10 | — | | **Total** | **16,001** | **11,571** | [Corporate Governance](index=139&type=section&id=ITEM%2016G.%20CORPORATE%20GOVERNANCE) As a foreign private issuer and controlled company, Polestar follows most Nasdaq rules but utilizes certain governance exemptions - Polestar is a **foreign private issuer and a controlled company**, exempting it from certain Nasdaq governance rules[410](index=410&type=chunk)[309](index=309&type=chunk) - The company voluntarily complies with most Nasdaq rules but **does not require its compensation and nominating committees to be composed entirely of independent directors**[410](index=410&type=chunk) [Cybersecurity](index=140&type=section&id=ITEM%2016K.%20CYBERSECURITY) The company maintains a cybersecurity program with board oversight and has experienced no material incidents in the last fiscal year - Polestar's cybersecurity risk management is integrated into its enterprise risk program, with **oversight from the Audit Committee**[413](index=413&type=chunk)[414](index=414&type=chunk) - A dedicated Information Security Team, led by a CISO, and a **third-party 24/7 Security Operations Center (SOC)** are in place to manage threats[413](index=413&type=chunk)[415](index=415&type=chunk) - **No material cybersecurity incidents** were experienced during the last fiscal year[413](index=413&type=chunk) PART III [Financial Statements](index=140&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) This section presents the audited consolidated financial statements, which include an adverse opinion on internal controls and a going concern warning - The auditor's report expresses an unqualified opinion on the financial statements but an **adverse opinion on internal control over financial reporting**[440](index=440&type=chunk) - The auditor's report notes that the need for additional financing raises **substantial doubt about the company's ability to continue as a going concern**[441](index=441&type=chunk)[468](index=468&type=chunk) - The financial statements for 2022 and 2021 have been **restated to correct immaterial errors** primarily related to inventory and expense accounting[182](index=182&type=chunk)[473](index=473&type=chunk) [Exhibits](index=141&type=section&id=ITEM%2019.%20EXHIBITS) This section lists all exhibits filed with the annual report, including material contracts and corporate documents

PART I [Key Information](index=15&type=section&id=ITEM%203.%20KEY%20INFORMATION) The company faces significant risks across its business, operations, and financing, including a history of net losses and material weaknesses in internal controls [Risk Factors](index=15&type=section&id=D.%20Risk%20Factors) Polestar's operations are subject to a wide array of risks including dependency on partners, supply chain issues, intense competition, and regulatory challenges - The company has incurred net losses each year since its inception and had an accumulated deficit of **$3.7 billion** as of December 31, 2022[136](index=136&type=chunk) - Polestar's independent auditors have included a **'going concern'** explanatory paragraph in their report, indicating substantial doubt about the company's ability to continue operations without securing additional funding[137](index=137&type=chunk) - The company relies heavily on agreements with strategic partners **Volvo Cars and Geely** for R&D, IP licensing, purchasing, and manufacturing, and any disruption could materially harm its ability to operate[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) - Operations are subject to significant risks specific to **China**, including reliance on Chinese manufacturing facilities and suppliers, potential government intervention, and complex data security laws[91](index=91&type=chunk)[158](index=158&type=chunk)[162](index=162&type=chunk) - **Four material weaknesses** in internal control over financial reporting were identified as of December 31, 2022, related to personnel, revenue recognition, intangible assets, and inventory controls[346](index=346&type=chunk) [Information on the Company](index=82&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) Polestar operates as a premium electric car brand with an asset-light model, leveraging partners for manufacturing while developing a product portfolio of six vehicles by 2026 [History and Development of the Company](index=82&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) The company became public in June 2022 through a business combination and has made significant capital expenditures in production tooling and R&D Capital Expenditures (in TUSD) | Year | Amount (TUSD) | | :--- | :--- | | 2022 | 380,457 | | 2021 | 504,774 | | 2020 | 400,793 | - Capital expenditures in 2023 are anticipated to be financed through a mix of equity or debt instruments, credit facilities, and related-party loans[393](index=393&type=chunk) [Business Overview](index=82&type=section&id=B.%20Business%20Overview) The company is a Swedish premium electric car brand accelerating sustainable mobility through an asset-light model and a direct-to-consumer sales approach Revenue by Type (in TUSD) | Revenue Type | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Sales of vehicles | 2,404,246 | 1,290,031 | 542,783 | | Sales of software and performance engineered kits | 21,308 | 25,881 | 35,434 | | Sales of carbon credits | 10,984 | 6,299 | 27,141 | | Vehicle leasing revenue | 16,719 | 6,217 | — | | Other revenue | 8,639 | 8,753 | 4,887 | | **Total** | **2,461,896** | **1,337,181** | **610,245** | Revenue by Geographical Region (in TUSD) | Region | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Europe, the Middle East, and Africa | 1,619,046 | 1,029,058 | 568,311 | | North America | 609,058 | 265,661 | 28,084 | | Asia and Australia | 233,792 | 42,462 | 13,850 | | **Total** | **2,461,896** | **1,337,181** | **610,245** | - Polestar plans to introduce three new electric vehicles by 2026: **Polestar 4** (2023), **Polestar 5** (2024), and **Polestar 6** (2026)[398](index=398&type=chunk)[399](index=399&type=chunk) - The company utilizes a digital-first, direct-to-consumer sales model, supported by **158 physical Polestar Spaces** and **1,116 service points** via the Volvo Cars network as of Dec 31, 2022[402](index=402&type=chunk) - A key long-term goal is the **Polestar 0 project**, aiming to create a truly climate-neutral production car by 2030[400](index=400&type=chunk)[449](index=449&type=chunk) - Polestar delivered approximately **12,000 vehicles in Q1 2023**[412](index=412&type=chunk) [Organizational Structure](index=100&type=section&id=C.%20Organizational%20Structure) Polestar Automotive Holding UK PLC is the parent company with significant subsidiaries across Europe, North America, and Asia for sales and service - The company operates through a network of wholly-owned subsidiaries in key regions, including Polestar Holding AB (Sweden) and Polestar Automotive USA Inc[517](index=517&type=chunk)[518](index=518&type=chunk) [Property, Plants and Equipment](index=103&type=section&id=D.%20Property%2C%20Plants%20and%20Equipment) The company employs an asset-light manufacturing model, using partner facilities in China and the US for current and future vehicle production - Polestar vehicles are currently manufactured at a plant in Luqiao, China, which is **owned and operated by Volvo Cars**[521](index=521&type=chunk) - Future production of the Polestar 3 will occur at Volvo Cars' facilities in **Chengdu, China, and Charleston, South Carolina, USA**[521](index=521&type=chunk)[522](index=522&type=chunk) - As of the report date, Polestar has committed to a plan to **sell its own low-volume manufacturing facility** in Chengdu, China[465](index=465&type=chunk)[524](index=524&type=chunk) [Operating and Financial Review and Prospects](index=104&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) Revenue grew 84% to $2.46 billion in 2022, but the company recorded a net loss of $466 million and faces liquidity challenges requiring external financing [Results of Operations](index=108&type=section&id=A.%20Results%20of%20operations) Revenue increased 84% to $2.46 billion in 2022, while the net loss improved to $466 million due to a significant non-cash gain from earn-out rights Consolidated Statement of Loss Summary (in TUSD) | | 2022 | 2021 | 2020 | |:---|---:|---:|---:| | **Revenue** | **2,461,896** | **1,337,181** | **610,245** | | Cost of sales | (2,342,453) | (1,336,321) | (553,724) | | **Gross profit** | **119,443** | **860** | **56,521** | | Selling, general and administrative expense | (864,598) | (714,724) | (314,926) | | Research and development expense | (167,242) | (232,922) | (183,849) | | Listing expense | (372,318) | — | — | | **Operating loss** | **(1,286,280)** | **(994,839)** | **(440,488)** | | Fair value change - Earn-out rights | 902,068 | — | — | | **Net loss** | **(465,789)** | **(1,007,454)** | **(484,858)** | - **Revenue increased by 84% in 2022**, driven by higher sales volumes of the Polestar 2 across key markets[569](index=569&type=chunk)[570](index=570&type=chunk) - Gross profit margin improved in 2022 due to higher fixed cost absorption from expanded production, though partially offset by unfavorable currency exchange rates[578](index=578&type=chunk) - The 2022 net loss was significantly reduced by a **non-cash gain of $902.1 million** from the fair value change of earn-out rights and a **$35.1 million gain** from the fair value change of Class C Shares[567](index=567&type=chunk)[586](index=586&type=chunk)[587](index=587&type=chunk) [Liquidity and Capital Resources](index=112&type=section&id=B.%20Liquidity%20and%20capital%20resources) The company's liquidity is a critical concern, with negative operating cash flows and a heavy reliance on external financing to fund its growth and operations - Management has determined there is **substantial doubt about Polestar's ability to continue as a going concern** due to recurring net losses and negative cash flows[590](index=590&type=chunk)[1066](index=1066&type=chunk) Cash and Cash Equivalents (in TUSD) | As of December 31, | 2022 | 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | 973,877 | 756,677 | Consolidated Cash Flows Summary (in TUSD) | | 2022 | 2021 | 2020 | |:---|---:|---:|---:| | Cash used for operating activities | (1,083,423) | (312,156) | (57,050) | | Cash used for investing activities | (715,973) | (129,672) | (243,707) | | Cash provided by financing activities | 2,083,029 | 909,572 | 359,643 | - The SPAC merger in June 2022 provided **net cash proceeds of $1.42 billion**, a primary source of financing during the year[548](index=548&type=chunk)[624](index=624&type=chunk) - On November 3, 2022, Polestar entered into an 18-month term loan facility with shareholder Volvo Cars for **up to $800 million**[612](index=612&type=chunk) Contractual Obligations and Commitments as of Dec 31, 2022 (in TUSD) | | Total | Less than 1 year | 1-5 years | After 5 years | |:---|---:|---:|---:|---:| | Capital commitments | 396,261 | 283,400 | 112,861 | — | | Credit facilities, including sale leasebacks | 1,328,752 | 1,328,752 | — | — | | Lease obligations | 120,465 | 21,717 | 69,135 | 29,613 | | **Total** | **1,845,478** | **1,633,869** | **181,996** | **29,613** | [Non-GAAP Financial Measures](index=116&type=section&id=C.%20Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like Adjusted Operating Loss and Free Cash Flow to provide a clearer view of underlying business trends Reconciliation of GAAP and Non-GAAP Results (in TUSD) | Measure | 2022 | 2021 | 2020 | |:---|---:|---:|---:| | **Operating loss (GAAP)** | **(1,286,280)** | **(994,839)** | **(440,488)** | | Listing expense | 372,318 | — | — | | **Adjusted operating loss (Non-GAAP)** | **(913,962)** | **(994,839)** | **(440,488)** | | **Net loss (GAAP)** | **(465,789)** | **(1,007,454)** | **(484,858)** | | Adjustments for Adjusted EBITDA | (319,812) | (724,492) | 252,913 | | **Adjusted EBITDA (Non-GAAP)** | **(785,601)** | **(724,492)** | **(231,945)** | | Adjustments for Adjusted Net Loss | (564,840) | — | — | | **Adjusted net loss (Non-GAAP)** | **(1,030,629)** | **(1,007,454)** | **(484,858)** | | **Net cash used for operating activities (GAAP)** | **(1,083,423)** | **(312,156)** | **(57,050)** | | Additions to PP&E and intangible assets | (713,473) | (129,672) | (243,707) | | **Free cash flow (Non-GAAP)** | **(1,796,896)** | **(441,828)** | **(300,757)** | [Directors, Senior Management and Employees](index=123&type=section&id=ITEM%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) The company is led by an experienced executive team and board, with compensation tied to performance and exemptions from certain Nasdaq governance rules [Directors and Executive Officers](index=123&type=section&id=A.%20Directors%20and%20Executive%20Officers) Polestar's leadership team and board comprise members with extensive experience in the automotive, technology, and financial sectors from major corporations - The executive team consists of **Thomas Ingenlath (CEO)**, **Johan Malmqvist (CFO)**, and **Dennis Nobelius (COO)**[674](index=674&type=chunk) - The Board of Directors is chaired by **Håkan Samuelsson**, former President and CEO of Volvo Cars[679](index=679&type=chunk) [Executive Officer and Director Compensation](index=127&type=section&id=B.%20Executive%20Officer%20and%20Director%20Compensation) Executive compensation includes salary, performance-based bonuses, and long-term equity incentives, while non-employee directors receive a fixed annual fee - The aggregate compensation for the three executive officers for the year ended Dec 31, 2022, was approximately **SEK 35.4 million (or $3.4 million)**[699](index=699&type=chunk) - The 2022 annual bonus program was based on five KPIs and resulted in a **payout of 106%** of the target bonus levels[701](index=701&type=chunk) - Non-employee directors receive an annual fee of **$200,000 ($350,000 for the chair)**, with half of the net fee used to purchase company ADSs[713](index=713&type=chunk) - The company adopted the **2022 Omnibus Incentive Plan** and the **2022 Employee Stock Purchase Plan** to provide long-term equity incentives[715](index=715&type=chunk)[717](index=717&type=chunk)[735](index=735&type=chunk) [Board Practices](index=136&type=section&id=C.%20Board%20Practices) The Board of Directors is divided into three staggered classes and has three standing committees, with exemptions from certain Nasdaq rules as a foreign private issuer - The Board is divided into **three classes (Class I, II, III)** with staggered three-year terms[761](index=761&type=chunk) - The Board has three committees: **Audit, Compensation, and Nominating and Governance**, with the Audit Committee consisting entirely of independent directors[767](index=767&type=chunk)[768](index=768&type=chunk) - As a **'foreign private issuer'** and a **'controlled company,'** Polestar is exempt from certain Nasdaq corporate governance requirements[779](index=779&type=chunk)[784](index=784&type=chunk) [Employees](index=139&type=section&id=D.%20Employees) As of year-end 2022, Polestar employed over 2,377 people globally and adheres to local collective bargaining requirements in several European countries - As of December 31, 2022, the company had more than **2,377 employees**[785](index=785&type=chunk) - Collective bargaining agreements are in place in **Sweden, Finland, the Netherlands, and Austria**[786](index=786&type=chunk) [Major Shareholders and Related Party Transactions](index=139&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) The company has a highly concentrated ownership structure and its operations are deeply integrated with related parties Volvo Cars and Geely through extensive agreements [Major Shareholders](index=139&type=section&id=A.%20Major%20Shareholders) Ownership is highly concentrated, with Li Shufu as the ultimate beneficial owner of approximately 88.5% of the company's shares, giving him significant control - As of December 31, 2022, **Li Shufu is the beneficial owner of 1,866,576,927 shares**, representing approximately **88.5%** of outstanding shares[794](index=794&type=chunk)[795](index=795&type=chunk) - The company has a dual-class share structure where **Class B shares have ten votes per share**, concentrating voting power with Class B shareholders[352](index=352&type=chunk)[790](index=790&type=chunk) [Related Party Transactions](index=141&type=section&id=B.%20Related%20Party%20Transactions) Polestar's business model relies heavily on a wide range of transactions with its related parties, Volvo Cars and Geely, for core operational functions - Polestar has a term loan facility with Snita (a Volvo Cars subsidiary) for **up to $800 million**, available for 18 months from November 3, 2022[810](index=810&type=chunk) - The company has numerous agreements with Volvo Cars and Geely for **R&D, IP licensing, manufacturing engineering, logistics, and component supply**[468](index=468&type=chunk)[812](index=812&type=chunk)[822](index=822&type=chunk) - Polestar 2 is manufactured under contract at the Luqiao plant operated by Volvo Cars, with Polestar 3 production planned for Volvo Cars' plants in China and the US[830](index=830&type=chunk)[473](index=473&type=chunk) - Key shareholders have declared their intent to **subscribe for their pro rata share of any equity offerings** by the company until March 31, 2024[892](index=892&type=chunk) [Financial Information](index=163&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) The company provides consolidated financial statements, is subject to legal proceedings in the normal course of business, and does not intend to pay dividends - The company has **not paid any cash dividends** to date and does not intend to pay any in the foreseeable future, expecting to reinvest earnings into operations[900](index=900&type=chunk) - Polestar is subject to various legal proceedings from the normal course of business, but no specific material unfavorable rulings are reported as having occurred[899](index=899&type=chunk) [The Offer and Listing](index=163&type=section&id=ITEM%209.%20THE%20OFFER%20AND%20LISTING) The company's Class A ADSs and Class C-1 ADSs are listed on the Nasdaq Stock Market under the ticker symbols 'PSNY' and 'PSNYW' - Class A ADSs are listed on Nasdaq under the symbol **'PSNY'**[902](index=902&type=chunk) - Class C-1 ADSs are listed on Nasdaq under the symbol **'PSNYW'**[902](index=902&type=chunk) [Additional Information](index=164&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section provides details on corporate governance, material contracts, and key tax considerations for security holders, including its non-PFIC status for 2022 [Taxation](index=164&type=section&id=E.%20Taxation) The company outlines material U.S. and U.K. tax considerations, including its status as a non-U.S. corporation and its belief that it was not a PFIC in 2022 - Polestar does not believe it was classified as a **Passive Foreign Investment Company (PFIC)** for its taxable year ended December 31, 2022[295](index=295&type=chunk)[947](index=947&type=chunk) - The company does not expect to be treated as a **U.S. corporation for U.S. federal income tax purposes** under Section 7874 rules[297](index=297&type=chunk)[924](index=924&type=chunk) - Dividends paid by the company are **not expected to be subject to U.K. withholding tax**[957](index=957&type=chunk) - Transfers of ADSs through the Depository Trust Company (DTC) are **not expected to attract U.K. stamp duty** or stamp duty reserve tax (SDRT)[292](index=292&type=chunk)[959](index=959&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=173&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to market risks inherent to its global business operations, including foreign currency, interest rate, credit, and liquidity risks - The company is exposed to market risks including **foreign exchange risk, interest rate risk, credit risk, and liquidity risk**[657](index=657&type=chunk) [Description of Securities Other Than Equity Securities](index=173&type=section&id=ITEM%2012.%20DESCRIPTION%20OF%20SECURITIES%20OTHER%20THAN%20EQUITY%20SECURITIES) Holders of the company's American Depositary Shares (ADSs) are responsible for various fees for issuance, cancellation, and other services ADS Holder Fees and Charges | Service | Fee | | :--- | :--- | | ADS Issuance (excluding initial deposit) | Up to US$0.05 per ADS issued | | ADS Cancellation | Up to US$0.05 per ADS cancelled | | Cash Distribution | Up to US$0.05 per ADS held | | Stock Dividend / Rights Distribution | Up to US$0.05 per ADS held | | Annual ADS Service Fee | Up to US$0.05 per ADS held on record date | - ADS holders are also responsible for paying taxes, registration fees, currency conversion costs, and other reasonable out-of-pocket expenses[972](index=972&type=chunk) PART II [Controls and Procedures](index=176&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls were not effective as of year-end 2022 due to four material weaknesses in internal control over financial reporting - Management concluded that as of December 31, 2022, the company's disclosure controls and procedures were **not effective**[982](index=982&type=chunk) - **Four material weaknesses** in internal control over financial reporting were identified related to insufficient qualified personnel, revenue recognition, intangible assets, and inventory controls[982](index=982&type=chunk) - Remediation actions completed in 2022 include designing an internal control framework and strengthening the finance function with new personnel[984](index=984&type=chunk) [Corporate Governance and Other Matters](index=177&type=section&id=ITEM%2016.%20%5BReserved%5D) The company has an audit committee financial expert, has adopted a code of conduct, and is exempt from certain Nasdaq governance rules as a foreign private issuer - The Board has determined that **Carla De Geyseleer** qualifies as an 'audit committee financial expert'[988](index=988&type=chunk) Principal Accountant Fees (in TUSD) | Fee Type | 2022 | 2021 | | :--- | :--- | :--- | | Audit fees | 11,159 | 491 | | Audit-related fees | 412 | — | | Tax fees | — | — | | All other fees | — | 2,306 | | **Total** | **11,571** | **2,797** | - As a foreign private issuer, Polestar is **exempt from certain Nasdaq corporate governance rules**, such as requiring fully independent compensation and nominating committees[998](index=998&type=chunk) PART III [Financial Statements](index=180&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) The audited consolidated financial statements reflect significant revenue growth alongside continued net losses, with the auditor's report noting a going concern uncertainty Consolidated Statement of Financial Position Summary (in TUSD) | | Dec 31, 2022 | Dec 31, 2021 | |:---|---:|---:| | **Total assets** | **3,942,451** | **3,309,693** | | Total current assets | 2,180,334 | 1,606,986 | | *Cash and cash equivalents* | *973,877* | *756,677* | | **Total liabilities** | **(4,076,094)** | **(3,187,197)** | | Total current liabilities | (3,252,502) | (3,040,716) | | **Total equity** | **133,643** | **(122,496)** | - The independent auditor's report includes a **'Going Concern' paragraph**, noting that the company's need for additional financing raises substantial doubt about its ability to continue[1030](index=1030&type=chunk) - Critical audit matters identified by the auditor include **revenue recognition** for vehicle sales and the **existence, completeness, and valuation of inventories**[1035](index=1035&type=chunk)[1039](index=1039&type=chunk) - The merger with GGI was accounted for as a reverse recapitalization, resulting in a **non-cash, one-time listing expense of $372.3 million**[1057](index=1057&type=chunk)[1283](index=1283&type=chunk) [Exhibits](index=181&type=section&id=ITEM%2019.%20EXHIBITS) This section provides an index of all exhibits filed with the annual report, including foundational corporate documents and various material contracts - The exhibits include the company's **Articles of Association, ADS Deposit Agreements, and the Business Combination Agreement**[1008](index=1008&type=chunk)[1009](index=1009&type=chunk) - Numerous material contracts are filed as exhibits, including service, license, and manufacturing agreements with **Volvo Car Corporation and various Geely entities**[1010](index=1010&type=chunk)[1011](index=1011&type=chunk)[1012](index=1012&type=chunk) - **Certifications by the Principal Executive Officer and Principal Financial Officer** pursuant to the Sarbanes-Oxley Act are included[1018](index=1018&type=chunk)