A major funding boost for ailing Chinese-Swedish electric vehicle (EV) specialist Polestar may not be enough for the brand to break even, as it fights for relevancy in an increasingly crowded market.
This week, Polestar announced it had secured US$950 million (A$1.46 billion) in funding from a syndicate of 12 global banks.
The near billion-dollar injection comes shortly after former parent company Volvo offloaded a 30 per cent stake in Polestar to its own parent company, Chinese car giant Geely, which it valued at 9.5 billion Swedish krona (A$1.4 billion).
Volvo retains an 18 per cent stake in the brand, and Polestar vehicles can continue to be serviced at Volvo dealers.
Polestar 2
However, the investment does not reach the US$1.3 billion (A$2bn) in external funding Polestar previously said it would need to break even in 2025.
While Polestar is now owned by Geely, it shares almost all of its EV components with either its parent company or more established sibling Volvo.
As such, the brand has struggled to establish itself against an increasingly competitive EV market, with competition coming from fellow Chinese brands – which aim themselves towards the more affordable end of the spectrum – and established brands including Tesla.
In January, Polestar said it would retrench 450 staff, about 15 per cent of its workforce, in a bid to reduce external spending and edge closer to breaking even.
Polestar 4
At present, Polestar’s model lineup consists of the Polestar 2 (based on the Volvo XC40) and the upcoming Polestar 4. The latter being its only truly bespoke model but still underpinned by a Geely EV platform.
The upcoming Polestar 3 large SUV is the brand’s spin-off on the new Volvo EX90, with both vehicles delayed due to development issues.
In 2023, the Polestar 2 was the seventh best-selling EV in Australia, with the 2463 examples sold representing less than one-tenth of the Tesla Model Y’s 28,769 sales.
It was also outsold by the electric Volvo XC40 upon which it is based, which recorded 2846 sales across the same period.
MORE: Volvo pulls plug on Polestar funding as electric car brand struggles
