A Polestar 4 electric SUV is on display during the 20th Shanghai International Automobile Industry Exhibition at the National Exhibition and Convention Center (Shanghai) on April 18, 2023 in Shanghai, China.

Vcg | Visual China Group | Getty Images

Swedish electric vehicle maker Polestar on Wednesday cut its longstanding 2025 deliveries target and said that despite cost cuts, it will still need to raise cash to break even that year.

The company also cut its guidance for the current year.

Shares rose about 3% in after-hours trading.

Polestar said it now targeting a gross profit margin “in the high teens” for 2025, with a total annual volume of roughly 155,000 to 165,000 vehicles. At the time of its initial public offering last year, Polestar was targeting annual sales of about 290,000 vehicles by the end of 2025.

For 2023, Polestar now expects to deliver “approximately 60,000” vehicles, at the low end of its previous guidance range, with a positive gross margin of about 2%. The company had previously guided to deliveries of between 60,000 and 70,000 vehicles in 2023, with a gross margin of 4% for the year.

Polestar’s gross margin was 1.1% in the first nine months of 2023 and 4.9% in 2022. It delivered 51,491 vehicles in 2022.

Polestar also said it is taking additional steps to cut costs. It has received $450 million in new loans from its founding investors, Chinese automaker Geely Automobile Holding and Geely subsidiary Volvo Cars. It now expects it will need additional outside funding of about $1.3 billion to get to break-even cash flow in 2025.

“By having taken the necessary steps to re-work our business plan, we are reducing costs and improving efficiencies to create a more resilient and profitable Polestar – and reducing our funding need at the same time,” CEO Thomas Ingenlath said in a statement.

The news came as part of Polestar’s third-quarter earnings report.

Polestar’s net loss for the third quarter was $155.4 million. A year ago, Polestar reported a net profit of $299.4 million, thanks to an accounting credit related to the decline of its stock price at the time.

Revenue for the third quarter increased to $613.2 million from $435.5 million during the same period last year.

Polestar delivered 13,976 vehicles in the third quarter, up 51% from a year ago, and a total of 41,817 vehicles in the first nine months of 2023.

Polestar had $951.1 million in cash and equivalents at the end of the third quarter, down from $1.06 billion as of June 30.

Polestar confirmed that its upcoming Polestar 3, a large electric SUV, is on track to begin production in China in the first quarter of 2024 and in the United States in the summer of next year. The Polestar 3 is based on a new platform developed by (and shared with) Volvo Cars. It was originally expected before the end of 2023, but delays with the platform’s software — developed by Volvo — pushed it into 2024.

Production of the Polestar 4, a smaller crossover SUV, will begin in China next week as planned, the company said. Deliveries are expected to begin in China next month, and in the rest of the world early next year. An additional model, an upscale sedan called Polestar 5, is currently expected to go into production in China by the end of 2024.

Original: Earnings: Polestar PSNY Q3 2023 earnings