Volvo Car has announced its support for the new business plan introduced by Polestar, the electric-car brand established by Volvo Car. As part of the plan, Polestar aims to enhance efficiency, reduce costs, and achieve higher profit margins. It is now setting its sights on reaching cash flow breakeven by 2025, with a gross margin in the high teens and an annual volume target of 155,000-165,000 cars.
Polestar’s CEO, Thomas Ingenlath, highlighted the importance of prioritizing margin progression over volume in the constantly evolving business landscape. In response to this plan, Volvo Car has not only extended the maturity of its $800 million loan to Polestar but has also raised the loan facility by an additional $200 million. Furthermore, Volvo Car has the option of converting a portion of these loans into new equity in Polestar.
China’s Zhejiang Geely Holding Group, which is the majority owner of Volvo Car, has also pledged its support to Polestar by providing a new $250 million loan. Similar to Volvo Car, Geely has the option of converting this loan into equity at a later stage.
To achieve its cash flow breakeven target, Polestar anticipates requiring around $1.3 billion in external funding. With the financial backing from both Volvo Car and Geely, Polestar is well-positioned to drive its business forward and establish itself as a key player in the electric-car industry.