Swedish electric vehicle maker Polestar trimmed its 2023 delivery forecast on Wednesday to the lower end of its earlier guidance and halved its gross margin goal, amid fears of a slowdown in EV demand and global economic uncertainty.
High rates of interest to chill stubborn inflation have hampered sentiment as consumers seeking to buy EVs face higher borrowing costs that largely offset price cuts by automakers to stimulate demand.
Polestar, which operates in 27 markets globally, said it might now deliver about 60,000 vehicles this 12 months, down from between 60,000 to 70,000. It had reiterated that forecast just last month after slashing the goal in May from the 80,000 it had estimated earlier.
The U.S.-listed company, founded by China’s Geely and Volvo Cars, also said it might achieve a gross margin of two% in 2023, down from its prior 4% forecast.
The corporate said on Wednesday it might double down on cutting costs to spice up margins and that it had secured additional term loans from Volvo and Geely totaling $450 million, maturing June 2027.
“These actions and these initiatives are done within the context of what’s currently a more difficult market environment and that is reflected in our volume aspirations,” Polestar Chief Financial Officer Johan Malmqvist said in an interview with Reuters.
CEO Thomas Ingenlath said Polestar, with its give attention to premium fairly than mass market sales, was chasing profitability fairly than volumes and would draw back from cutting prices.
Wednesday’s revised forecast from Polestar got here after market leader Tesla’s CEO Elon Musk last month flagged his concerns over expanding factory capability until rates of interest fall, according to similar caution from General Motors and Ford.
EV startup Lucid cut its full-year production forecast on Tuesday “to prudently align with deliveries.”
At the same time as pandemic-driven supply chain bottlenecks eased, Polestar has grappled with a delayed production start and growing competition, especially from Chinese players, forcing the corporate to chop jobs to maintain a lid on costs.
After the extra loans from Volvo and Geely and efforts to cut back costs, Polestar said it might need external funding of about $1.3 billion in debt and equity until money flow breaks even in 2025. The corporate said it sees gross margin within the high teens with a complete annual volume of about 155,000 to 165,000 vehicles in 2025.
Polestar reported money and money equivalents of $951.1 million as of the top of September, compared with $1.06 billion three months prior.
Revenue for the third quarter rose 41% to $613.2 million, driven primarily by increased prices of its vehicles, but higher expenses led to operating losses swelling 33% to $261.2 million. (Reporting by Abhirup Roy in San Francisco; Editing by Rod Nickel and Jamie Freed)
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