Polestar CEO Thomas Ingenlath said that revealing the electric car maker's midterm plan -- which includes boosting sales to 290,000 by 2025 from 29,000 last year and reaching breakeven in 2023 --. The vehicles higher price tag relative Polestars line-up of electric sedans, paired with the new SPA 2 platform that is designed to enable better cost efficiencies and margins are also in the EV makers favour for offsetting near-term macro challenges to its fundamental performance. Thank you for reading my analysis. The current gross profit margin for Polestar Automotive Holding UK as of December 31, 2022 is % . Selling, general and administrative expenses was $(239.2) million. Dimitrios Kambouris/Getty Images Entertainment. This would also potentially bring Polestar's full year 2022 vehicle sales close to current consensus estimates of $2.4 billion. Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Polestar defines adjusted operating loss as operating loss, adjusted to exclude listing expense. Applying the stated 8% rise in the cost of sales, last year's cost of sales of $29 million Polestars next debut will be an SUV based on the large Scalable Product Architecture (SPA) chassis found under the XC90, but it will reportedly be tuned to feel more performance-oriented instead. The company plans to create a truly climate-neutral production car, without offsetting, by 2030. The company delivered 21,000 vehicles in the fourth quarter, more than doubling the some-9,200 vehicles delivered in the third quarter. GOTHENBURG, SWEDEN 2 March 2023. Note 20 of the 2022 20-F shows 2,109.9 million shares outstanding composed of 467,677,673 A shares + 1,642,233,575 B shares. The EV maker, backed by established industry vets Volvo and Geely, managed to turn a profit for the first time as a public company. Polestar delivered 51,500 vehicles in 2022, up 80% y/y and better than management had previously expected due to the lingering after-effect of China's on-and-off COVID disruptions. Relationships with Volvo Cars and Geely Automotive are key for Polestars asset-light approach. Polestar CEO Thomas Ingenlath speaks to CNBC about its latest EV lineup, and if it can turn a profit. InsideEVs calls it a "devastating efficiency difference." Polestar 2 Dual Motor Vs. Tesla Model 3. However, it is currently uncertain whether the Polestar 3s battery cells will meet the America (or free trade agreement country) cell composition threshold (minimum 40%) to extend buyers with the second $3,500 increment in tax credits, given Chinas CATL is currently one of its key suppliers, second to LG Chem (OTCPK:LGCLF). As see in the chart below, Polestar has forecasted a 92% revenue CAGR up to 2025, setting a 2025 revenue goal of $17.6 billion, a 2025 gross profit goal of $3.7 billion on a 21% margin and a 2025 EBIT profit of $1.3 billion on an 8% margin. Recall that profit is a function of both sales and costs. Polestar Automotive Holding Uk Plc (NASDAQ:PSNY) profitability analysis, historical growth, margins, return on capital ratios, free cash flow, and more. Our analysis provides a deep dive on growth drivers present in the secular market to identify outperforming investments. My thesis is that Polestar (NASDAQ:PSNY) is advantaged in that they enjoy better gross margins than Lucid (LCID) and Rivian (RIVN) while having more global sales opportunities than XPeng (XPEV) and NIO (NIO). Polestar's upcoming earnings call will likely be a tell-tale on everything from order book growth to gauge demand resilience against looming macroeconomic headwinds, to its liquidity stance as well as production and delivery ramp-up progress to ensure adequate capturing of market share within the increasingly saturated EV market. So as we guided in the release, we expect gross margins to be broadly in line with 2022. The region currently represents about 45% of Polestar's sales, subjecting it to the acute headwinds of a looming recession in Europe's key economies this year. I am not receiving compensation for it (other than from Seeking Alpha). Earlier last week, the Polestar stock staged a brief relief rally after reaffirming its full year delivery guidance of 50,000 vehicles despite cautioning continued supply chain snarls and ensuing impacts from COVID lockdowns in China in 2Q22. Specifically, new vehicle pre-order volumes are already showing cracks in auto demand, as surging borrowing costs and sticker prices continue to deter buyers. FTC: We use income earning auto affiliate links. While Polestar continues to outperform peers in terms of ramping up output volumes, thanks to its competitive advantage stemming from platform-sharing and manufacturing support from parent companies Volvo and Geely, it remains victim to markets unforgiving hand over unprofitable, long-duration stocks. Another near-term risk facing Polestar is its potential loss of market share at a meaningful time for EV adoption in the U.S. Investors are starting to raise concerns over whether Polestars lack of production capabilities in the U.S., which would potentially preclude it from some of the financial incentives stemming from the recently enacted Inflation Reduction Act (IRA), and dilute its appeal to prospective car buyers. "We are intent not to push cars into the market for any price just . You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. But until there is greater visibility into its capital structure and alleviation in monetary policy tightening, the Polestar stock will likely be subject to further volatility that can unleash a lower drop. accrued income related parties, Accumulated deficit & Foreign currency translation Forward-looking investors should look at the gross margins for each quarter in 2023 to make sure the year doesnt end up being worse than 2022. Remembering that Snita Holding B.V., is a subsidiary of Volvo Car (OTCPK:VLVOF), the 20-F has a helpful share capital table: Per the details above, Polestars relationship with Geely is complicated. The Company also announced Polestar 3 with Luminar LiDAR is available to order, and an expanded partnership with Luminar to work on the integration of LiDAR in Polestar 5. The 2024 model year will feature a new high-tech front end that reflects the design language premiered by Polestar 3, substantial performance increases with all-new electric motors, even more powerful batteries, longer range, sustainability improvements and, for the first time in a Polestar, rear-wheel drive. Polestar has added eight new markets since the start of 2022: Polestar has 158 retail locations and 1,116 service points across its markets, up 55 and 305 respectively, since the end of 2021. During the period from 2010 to 2023, Polestar Automotive Profit Margin regression line of anual values had r-squared of 0.60 and arithmetic mean of (1.77). The company is currently one of the few EV upstarts that boast a positive, though nominal, auto gross profit margin, which is a plus under today's market climate where investors prefer growth that is accompanied by visibility into bottom line expansion. The outperformance was a breath of fresh air following consecutive misses observed at EV pioneer Tesla (TSLA) and rival upstart Rivian (RIVN) last week, which increased investors' angst over demand risks in the nascent industry that has previously been viewed as a relatively more resilient corner of the broader auto sector. Ineligibility would likely dull Polestars allure in the American EV market when compared to rivals like the Tesla Model 3/Y and offerings by legacy automakers at a time when domestic demand is expected to reach an inflection point. Since inception, we have worked on over 6bn worth of transactions. As previously announced, Polestar anticipates global volumes to increase by nearly 60% to approximately 80,000 cars, predominantly driven by Polestar 2 sales. The IRA currently extends a $7,500 tax credit to buyers with individual annual gross income of under $150,000 (or $300,000 for joint filers) on eligible EVs priced at under $55,000 for passenger vehicles and under $80,000 for pickups/SUVs/vans that are assembled in North America. POLESTAR AUTO, formerly known as Gores Guggenheim Inc., is based in LOS ANGELES. Disclaimer: Any material in this article should not be relied on as a formal investment recommendation. Adding to the young brands identity crisis, Volvo announced that its entire lineup would be free of internal combustion by 2030. Search for the stock name - PSNY. The EV manufacturer doesnt mince words Porsche is in Polestars sights as it seeks to enhance its high-performance reputation. In addition to production ramp-up and profit margins, investors will also be looking to updates on Polestars liquidity position, given its balance sheet and capital structure remains a mystery. Polestar is a mid-market corporate finance boutique providing advisory services to businesses across our five key sectors: Sustainability; Software, Media & Technology; Business Services; Manufacturing & Distribution; and Health & Education. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. If you use our chart images on your site or blog, we ask that you provide attribution via a "dofollow" link back to this page. Based on the chart below, Polestar currently has a market share of 0.2% of the global premium car market. Pre-tax profit margin can be defined as earnings before taxes as a portion of total revenue. The Polestar ( NASDAQ: PSNY) stock has lost close to 60% of its value since debuting on the Nasdaq in June. If you have an ad-blocker enabled you may be blocked from proceeding. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Under the current market where there is no bottom in sight for stocks of high growth, yet unprofitable, businesses like Polestar, the disclosure of its balance sheet would shed light on its book value and potentially result in greater visibility to where the stock might arrest its recent declines, and improve investors confidence. Recent developments design, innovation, sustainability. I wrote this article myself, and it expresses my own opinions. The luxury EV car company improved its gross profit margin dramatically in its latest quarter. Much of the delivered volumes are likely represented by the Polestar 2 - its first fully electric sedan - as sales of the predecessor Polestar 1 hybrid continue to phase out following discontinued productions last year. The following analysis will discuss the drivers of related sales losses for the year, and gauge their potential implications on the Polestar stock's near-term performance outlook. However, beginning next year, when the IRA extends 1) $3,500 tax credit for EVs fitted with a battery pack that is assembled in North America, and 2) another $3,500 tax credit for EVs fitted with battery materials sourced and/or processed in the U.S. or a free trade agreement country, the Polestar 3 just might be able to make it on one part of the list. cash equivalents, Net increase in cash and cash equivalents, Cash and cash equivalents at beginning of . We believe the stock remains a favourable investment from a long-view perspective considering its gradual market share gains and proven competitive advantage in operating a capital light business model that also benefits from additional cost efficiencies stemming from operational overlaps with parent companies Volvo and Geely, which is further corroborated by its positive, albeit slim, auto gross margins to date a rare find across EV pureplays. The Polestar 4 may use parent company Geelys Sustainable Electric Architecture (SEA), with power that should slightly eclipse the XC40 Recharge. benefited from during public listings in 2021, while continued deterioration to the broader macroeconomic outlook amid surging inflation, rising interest rates, and a looming recession compounded pains. If the business earns 6% on capital over 40 years and you hold it for that 40 years, you're not going to make much different than a 6% returneven if you originally buy it at a huge discount. In contrast, if you bought the same investment, but had to pay taxes every year of 35% out of the 15% that you earned, then your return would be 15% minus 35% of 15%or only 9.75% per year compounded. Please be aware of the risks associated with these stocks. the time of this writing, RMB 100 is equivalent to about $14.55. Though small-to-middling among other automakers, that number is still distantly removed from the companys cottage-industry roots in Swedish racing. Search for the stock by name or ticker symbol. As nice as the Polestar 1 grand touring coupe and Polestar 2 five-door crossover are, they dont exactly tango with racing cars in terms of driving excitement. It principally produced electric performance cars. Potential adjustments to operational and consolidated financial information may be identified from work performed during Polestars year-end audit. Best for low fees Polestars asset-light strategy helped the company shrink its operating loss by 33% while promoting its first quarterly profit as a public company of $299.4 million. And XPeng isnt even holding their own in China right now as the CPCA shows their sales dropped 47.3% from 34,561 units in 1Q22 to 18,230 units in 1Q23. Forward-looking statements generally relate to future events or the future financial or operating performance of Polestar. Polestar Automotive Holding UK Profit Margin (Quarterly): -26.64% for Dec. 31, 2022. The company had already announced a price hike for its 2023 model Polestar 2 sedans in the U.S. by $2,000 to $2,400, depending on the trim, earlier this year, which we expect provide a cushion for near-term input cost increases and FX headwinds from the surging dollar, and prevent the company from material deviation from its profit realization timeline. A fastback roofline and two rows of seats distinguish it from the more traditional Volvo, and reports suggest it will be faster as well, courtesy of either retuned versions of the parent companys electric motors or the aforementioned P10 units. Another very simple effect I very seldom see discussed either by investment managers or anybody else is the effect of taxes. The 20-F mentions one service agreement with Geely Automotive from January 18th of 2021 and another from December 28th of 2021. Precious Metals. Production vehicle design and features subject to change. Obviously all of these relatively small companies should be able to improve gross margins as they build scale. It's that simple. Polestar 3 launched in late 2022 as the SUV for the electric age a large high-performance SUV that delivers sports car dynamics with a low stance and spacious interior. Yet, the sustainability of this figure is likely at risk considering the expectation for elevated vehicle delivery costs during peak logistics weeks especially as automakers across the industry rush to get completed vehicles on the production floor, which have benefited from easing supply chain constraints in recent months, to customers and make their respective annual sales targets before the year ends. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. He is an experienced investor, financial writer, and EV enthusiast. It principally produced electric performance cars. As predicted in our previous. Energy. The below table summarises key preliminary operational results as of and for the year ended December 31, 2022. Please check your download folder. If he isnt telling you about his latest 10K findings, you can find him enjoying the outdoors or exercising, Stay up to date with the latest content by, Electric Vehicle Price Guide best prices for dealers in the US, Tesla changes Model Y Long Range in Canada to a Chinese import, Luna Talaria XXX sneak peak, more details Saturday, Renting a gas-powered motorbike in Spain reminded me why I went electric, VW reveals three-row ID. I/we have a beneficial long position in the shares of PSNY either through stock ownership, options, or other derivatives. The unaudited financial and operational information published in this press release is preliminary and subject to potential adjustments. That doesnt mean it will be resting on Volvos laurels, though. Polestar is currently an EV upstart that boasts one of the best production and delivery numbers, with slim positive gross margins, yet trading at a significant discount to peers. Free cash flow is calculated by subtracting cash flows used for tangible assets and intangible assets from cash used for operating activities. Please check your download folder. Entering text into the input field will update the search result below. Ongoing COVID disruptions in China entering into the new year likely play a role in the modest full year 2023 delivery guide as well. Source: "Lucid: 2 Critical Near-Term Watch Items". Somehow Tesla (. ) And as I mentioned, first deliveries of Polestar 3. Aside from the $1.4 billion in cash and cash equivalents disclosed as of June 30, which is inclusive of proceeds from Polestars reverse merger with Gores Guggenheim on June 24th, as well as several credit facilities that provide it with access to about $345 million to support working capital needs, Polestars quarterly cash burn rate can only be estimated based on its operating costs disclosed for 1H22.