This analysis was first published in SvD Näringsliv, in Swedish, on November 11th, 2022. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.
While Tesla’s CEO is busy elsewhere, the other EV companies are scrambling to find their footing. Polestar has solved its immediate cash crisis — but an enormous challenge still lies ahead.
17 billion kronor.
That is what Polestar’s main shareholders — Volvo Cars and PSD Investment (owned by Volvo’s chairman, who represents Geely) — have committed to lending the struggling electric vehicle company. And now that Polestar has released its latest quarterly figures, it is clear why those billions are needed. The money is still flowing out fast.
The new quarterly numbers show revenue doubled year-on-year — from 213 to 435 million dollars. That is a positive sign. But the losses are still significant: the company lost 196 million dollars, roughly two billion kronor, in the third quarter alone.
That is a meaningful improvement compared with the same period last year, but the path to profitability is still far off.
That more capital would be needed was therefore no surprise. And tapping the stock market in current conditions was not a realistic option.
A loan from existing shareholders was therefore one of the few reasonably viable alternatives left.
But Polestar is far from alone among EV companies facing this pressure. Consider just a few of the share price performances this year:
Xpeng: down 86 percent. Rivian: down 68 percent. Fisker: down 52 percent. The list goes on. With that kind of share price performance, the stock market becomes a liability rather than an asset as a source of capital.
In times like these, having well-capitalised shareholders matters enormously. Polestar appears to have them — but the expectation is that those owners are growing increasingly impatient.
Further down the list sits the EV company the world watches most closely: Tesla. Its share price is down 52 percent since the start of the year.
A few weeks ago, Tesla’s CEO Elon Musk was forced to sell around 4 billion dollars worth of Tesla stock — around 43 billion kronor — presumably to help fund his Twitter acquisition. The debt structure behind that deal may well become a significant financial problem down the line. With Pfizer, Carlsberg and Audi all pausing their advertising on Twitter, the pressure on the platform is only growing.
The market leader’s CEO therefore has his attention firmly elsewhere. He is a multi-billionaire — but one who has now bet enormously on a very different kind of company. Does Tesla miss his undivided focus?
The answer is probably yes.
Tesla’s lead in the market was not built on Musk’s undivided attention alone. But the main challenge for the EV industry right now is intensifying competition — and that is exactly where leadership presence matters.
Volkswagen’s various ID models now share the roads with Audi’s e-tron, the Renault Zoe and Kia’s EV6. Polestar’s parent company Volvo Cars just launched its first fully electric SUV, the EX90 — competing in the same segment as Polestar itself.
The bottom line is clear. With a tougher financing environment, Polestar’s ability to keep pace with the competition has become harder to take for granted.
