Swedish electric vehicle manufacturer Polestar announced on Thursday that its financial losses more than doubled during the first three months of 2024, even as the company sold more vehicles than the previous year.
The automaker, which is primarily controlled by Chinese company Geely Holding, has been offering price cuts across Europe to entice hesitant consumers while dealing with U.S. trade restrictions that have squeezed profit margins and driven up production expenses.
Although Polestar’s European market focus helped boost vehicle sales by 7% between January and March, the company’s financial losses ballooned to $383 million during the quarter, compared to $166 million in losses during the same period last year.
Total revenue remained essentially unchanged at $633 million. The company’s earnings were hurt by selling fewer of its expensive Polestar 3 vehicles while moving more of the less costly Polestar 4 models.
“With implemented steps to improve our cost base being offset by more challenging market conditions, we are accelerating efforts to adjust our business model, become leaner and improve manufacturing efficiencies,” CEO Michael Lohscheller stated, though he declined to provide financial projections for the remainder of the year.
Looking ahead, Polestar plans to launch a new version of its Polestar 4 model later in 2024, with an updated Polestar 2 scheduled for 2027 and a compact SUV called the Polestar 7 coming after that.
Similar to other emerging electric vehicle companies, Polestar is spending heavily to develop new models and has recently obtained financing through loans and investments from Geely and banking institutions. Volvo Cars is also converting some of Polestar’s debt into company ownership. Additionally, the automaker received approval for a 50 million euro increase to its environmental financing arrangement.
The company’s available cash dropped to $676 million by the end of March, down from $1.16 billion three months earlier.
Operating costs during the first quarter increased due to higher sales commissions, temporary staffing expenses, and advertising spending.
Polestar announced it will release its second-quarter sales figures on July 9.
