Core Viewpoint - Polestar, a Nordic luxury electric vehicle brand, is facing significant challenges in the Chinese market, with sales plummeting to just 69 vehicles in the first half of 2025, raising concerns about its future operations in the region [1][6]. Sales Performance - In June 2025, Polestar sold only 6 vehicles, following a dismal performance with just 1 sale in March and no sales in April and May [1] - Cumulatively, Polestar has reported a net loss exceeding $5.3 billion (approximately 38 billion RMB) from 2019 to 2024, with losses projected to increase from $470 million in 2022 to $2.05 billion in 2024 [1] Financial Situation - As of the end of 2024, Polestar's net assets were negative $3.329 billion, with total liabilities reaching $7.383 billion [2] - Li Shufu, through his company, injected $200 million into Polestar, raising his ownership stake to 66% and providing a temporary boost to the company's financial situation [2] Strategic Adjustments - Polestar has undergone frequent changes in product positioning and pricing strategies, which have confused consumers and affected brand perception [4][5] - The company has shifted its focus to a "light asset" transformation, planning to reduce its dealer network and concentrate on direct sales and online models [6] Market Positioning - Polestar's initial high-end positioning with the Polestar 1 was followed by a rapid price reduction for the Polestar 2, leading to a perception of instability in pricing [4] - The introduction of the Polestar 3 and Polestar 4 aimed to reclaim market share but has not resulted in significant sales, with the latter model struggling to sell even 200 units in its first six months [4] Management and Operational Changes - The company has seen instability in its management team, with seven different CEOs in the Chinese market, which has further impacted operational consistency [5] - Despite rumors of exiting the Chinese market, Polestar has stated that its operations are running normally, although it has significantly reduced its workforce from 320 to 86 employees [6]

Core Viewpoint - Polestar Automotive is undergoing a strategic adjustment in its China operations, with significant management turnover and a potential exit from the Chinese market by the end of the year [1][4]. Sales Performance - In the first half of the year, Polestar sold only 69 vehicles in China, with monthly sales figures showing a drastic decline: 56 in January, 6 in February, 6 in June, 1 in March, and no sales in April and May [3][4]. - In contrast, Polestar's global sales reached 30,300 vehicles in the same period, marking a 51% increase year-over-year, with Q2 sales alone hitting 18,000 vehicles, a 38% increase [3]. Company Structure and Financials - Polestar Technology, a joint venture aimed at enhancing local operations, ceased operations in April 2023, and several key management personnel, including the China regional manager, have left the company [1][4]. - As of the end of 2024, Polestar's total assets are valued at $4.054 billion, with liabilities at $7.383 billion, resulting in a negative net asset of $3.329 billion [5]. - The company has incurred cumulative losses exceeding $5.1 billion from 2020 to 2024, with a projected net loss of $2 billion for 2024 alone [5]. Investment and Ownership Changes - In June 2023, Geely's major investor, PSD Investment Limited, injected $200 million into Polestar, raising its ownership stake to 44%, while Geely and its subsidiaries collectively hold 66% [5]. - Following this investment, Volvo's stake in Polestar decreased from 18% to 16% [5]. Future Outlook - Polestar aims for an annual retail sales growth of 30% to 35% from 2025 to 2027 and targets profitability by 2025 [6]. - Since its IPO in 2022, Polestar's stock price has plummeted by 90%, and it received a compliance notice from Nasdaq due to its stock price falling below $1 [6].

Core Insights - The depreciation rate of new energy vehicles (NEVs) in the second-hand market is significantly higher compared to traditional fuel vehicles, with many NEVs losing over half their value within three years [1][3][4] - The low resale value of NEVs is primarily attributed to frequent new model releases and price cuts, leading to a chaotic pricing structure in the market [5][6] - The penetration rate of second-hand NEVs is increasing, rising from 3.6% at the end of 2022 to 9.1% by April 2025, indicating a growing market potential [2] Group 1: Depreciation and Resale Value - The Polestar 2, registered in October 2021, has a resale price of 78,000 yuan, only 17% of its original price of 467,100 yuan, while the Polestar 4, registered in December 2023, is priced at 140,000 yuan, about 30% of its new price [1] - Data from Guazi shows that NEVs typically experience the highest depreciation in the first year, with over 10% of NEVs having a first-year resale value below 50% [3] - Brands with higher new car sales, such as Tesla and NIO, tend to have better resale values, with some Tesla models retaining over 60% of their value after three years [3] Group 2: Market Dynamics - The second-hand NEV market is still significantly smaller than the fuel vehicle market, with NEVs often requiring appointments for viewing, while fuel vehicles are readily available [4] - The ongoing "price war" in the new car market is impacting the second-hand market, forcing dealers to adopt a fast-moving sales model to avoid losses [5][6] - The rapid technological advancements in NEVs lead to older models becoming less competitive, further driving down their resale values [6] Group 3: Export Opportunities - The export of second-hand vehicles, including NEVs, is on the rise, with Zhejiang Province leading in this sector, and policies are being implemented to support this growth [8][9] - The demand for second-hand NEVs in international markets, particularly in Africa and the Middle East, is increasing, with domestic brands gaining attention [9]

Financial Data and Key Metrics Changes - Retail sales increased by 76% year-on-year in Q1 2025, with revenue growth of 84% driven by sales of Polestar 3 and Polestar 4 [6][24] - Gross margin improved to a positive 7%, a 15 percentage point increase compared to Q1 2024, primarily due to a favorable product mix [25][26] - Net loss decreased to $190 million, down $86 million or 31% from the previous year, while adjusted EBITDA loss improved to $150 million, a decrease of $97 million or 46% [26][27] Business Line Data and Key Metrics Changes - Polestar 2 accounted for 31% of total volume, Polestar 3 for approximately 20%, and Polestar 4 for 49%, indicating a strong preference for higher-margin models [78] - The introduction of the updated model year 2026 Polestar 2 included new technologies, enhancing its appeal [11] Market Data and Key Metrics Changes - The company reported strong growth in Europe, with 75% of total business volume coming from this region, while the U.S. market accounted for around 11% [33][68] - The U.S. retail sales grew by 74%, indicating significant momentum in this market [35][68] Company Strategy and Development Direction - The company aims to grow its sales points by 75% by 2026, having already increased dealer locations by 33% year-on-year, excluding China [9] - The strategy includes leveraging a growing model lineup, enhancing efficiencies, and reducing costs to improve profitability [18][20] - The company has paused its financial guidance for 2025 due to uncertainties surrounding international tariffs and government regulations, while reaffirming a growth target of 30% to 35% per annum from 2025 to 2027 [14][24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging and volatile environment due to geopolitical developments and confirmed tariffs impacting global car prices and consumer demand [28] - The focus remains on transforming commercial operations, leveraging the model lineup, executing cost-cutting measures, and improving processes [28][29] Other Important Information - The company has secured or renewed over $900 million in facilities, with a cash position of $732 million at the end of Q1 2025 [27][24] - The company is actively working on a new equity story in coordination with Geely, discussing potential investors to address capital needs [74] Q&A Session Summary Question: Impact of tariffs on demand - Management noted that 75% of total business is in Europe, with the U.S. market being well-positioned due to localized production, but tariffs will necessitate cost optimization [33][35] Question: Transition to dealer model - The transition from a direct distribution model to a dealership model is ongoing, requiring more locations and sales personnel, with significant growth expected in retail partnerships [39][40] Question: Opportunities for efficiency improvements - Management highlighted headcount reductions and cash optimization as key areas for improving efficiency, with a focus on managing working capital better [41][43] Question: COGS per vehicle reduction - The improvement in gross margin is attributed to a better product mix, with more profitable models contributing to a decrease in cost of goods sold per vehicle [47] Question: Manufacturing capacity and strategy - The company confirmed sufficient production capacity in the U.S. and emphasized Europe as a key market while navigating tariff impacts [71][68] Question: Liquidity position and cash burn - The average cash burn is expected to be between $100 million to $120 million per month, which is unsustainable, prompting a need for alternative financing sources [73][74]

Financial Data and Key Metrics Changes - Polestar reported a 76% increase in retail sales for Q1 2025 compared to the previous year, with revenue growth of 84% driven by sales of Polestar 3 and Polestar 4 [6][23] - The company achieved a positive gross margin of 7%, a significant improvement of 15 percentage points from the previous year, primarily due to a favorable product mix [24] - Net loss decreased by $86 million or 31% to $190 million, while adjusted EBITDA loss improved by $97 million or 46% to $150 million [25][26] Business Line Data and Key Metrics Changes - The sales mix for Q1 2025 included 31% Polestar 2, 20% Polestar 3, and 49% Polestar 4, indicating a strong preference for higher-margin models [80] - The introduction of the updated model year 2026 Polestar 2 and the continued success of Polestar 4 are expected to enhance the product lineup and profitability [10][11] Market Data and Key Metrics Changes - Approximately 75% of Polestar's total business is in Europe, with the U.S. market accounting for around 11% [32] - The company experienced a 74% growth in retail sales in the U.S. market, highlighting its potential for expansion [34] Company Strategy and Development Direction - Polestar aims to grow its sales points by 75% by 2026, having already increased dealer locations by 33% in Q1 2025 compared to the previous year [8] - The company is focusing on commercial transformation, leveraging its growing model lineup, and increasing operational efficiencies to improve profitability [17][18] - Polestar has paused its financial guidance for 2025 due to uncertainties surrounding international tariffs and government regulations, while reaffirming a growth target of 30% to 35% per annum from 2025 to 2027 [13][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging and volatile environment due to geopolitical developments and confirmed tariffs impacting global car prices and consumer demand [27] - The company is committed to transforming its commercial operations, optimizing its model lineup, and continuing cost-cutting measures to preserve cash [27][28] Other Important Information - Polestar's cash position at the end of Q1 2025 was $732 million, with a secured term facility of up to $450 million and a renewed green trade finance facility for €480 million [26][76] - The company is actively working on a new equity story in coordination with Geely to address its capital needs [76] Q&A Session Summary Question: Impact of tariffs on demand - Management noted that while tariffs have an impact, localization of production in the U.S. helps mitigate some effects, and they are monitoring cost elements closely [32][34] Question: Transition to dealer model - The transition from a direct distribution model to a dealership model is ongoing, requiring more locations and sales personnel, with expectations for significant growth in retail partnerships [40] Question: Efficiency improvements - Management highlighted ongoing efforts to improve efficiency through headcount reductions and better cash management, with a focus on optimizing inventory levels [42] Question: COGS per vehicle reduction - The improvement in gross margin is attributed to a better product mix, with more profitable models contributing to a decrease in cost of goods sold per vehicle [48] Question: Liquidity position and cash burn - The average cash burn is expected to be between $100 million to $120 million per month, which is not sustainable, prompting the need for alternative financing sources [76]

Core Points - Polestar is recalling over 27,800 Polestar 2 electric vehicles in the U.S. due to rearview camera display issues that may not show an image while reversing [1][2] - The recall affects 2021-2025 Polestar 2 models produced between July 2020 and late November 2022 [2] - The issue is attributed to a synchronization error between the Parking Assist Camera and the Infotainment Head Unit [2][4] Recall Details - Owners of the recalled vehicles will receive notification letters about the recall on June 19 [3] - The problem will be addressed through a software update that ensures a stable high-speed signal connection and includes a reset feature for the video signal receiving hardware [4] - Polestar 2 was first introduced in the U.S. market in 2020, but the company no longer manufactures this model for the U.S. [5] Company Overview - Polestar is a Swedish electric vehicle manufacturer that sells its products in 27 markets globally [5][6]

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].