Polestar secures credit line of nearly one billion euros

Polestar has secured 950 million US dollars in external financing. The credit line is intended to cover a large part of Polestar's estimated capital requirements to finance its next stage of development.

Image: Polestar

The financing is being provided by twelve international banks in the form of a three-year credit facility. These include BNP Paribas, Natixis, Standard Chartered, BBVA, HSBC and SPDB.

For Polestar, external financing is an important step after a turbulent few weeks. In January, it was announced that the brand had missed its sales target for 2023. As a result, not only was the management team restructured, but it was also announced that 15 per cent of the workforce would be laid off, which corresponds to around 450 employees – after some jobs had already been cut in the course of 2023. “The financing that has now been agreed will be accompanied by a comprehensive efficiency program from Polestar,” the press release now states.

The business plan presented in November, which was drawn up under the leadership of the then CFO Johan Malmqvist, aimed for Polestar to break even in 2025. Although Malmqvist was replaced in January, Polestar is still sticking to the plan.

Geely takes over most of the Volvo shares

Even after Volvo’s own major shareholder announced in February that it would reduce its stake from 48 to 18 per cent, the business plan remains in place. This is because Volvo is transferring its Polestar shares (quasi-internally) to Geely Sweden Holdings AB. This company is not only the largest shareholder in Volvo with 78.7 per cent, but will also become a heavyweight in Polestar. It is important to know that in the current shareholder structure, in addition to Volvo (with its 48 per cent), the investment company PSD Investment has a 39 per cent stake in Polestar. PSD is a personal investment company of Li Shufu, the chairman of Geely. Contrary to popular belief that Geely is already the owner of Polestars, these are shares that belong to the CEO. Geely Holding Sweden itself does not yet have a direct stake in Polestar.

In the current communication on the credit line, Polestar also states that Geely Sweden Holdings also supports the current course. “Securing financing from a consortium of global banks demonstrates the support of our partners for Polestar’s growth trajectory. Together with Geely’s full financial backing and access to innovative technology and engineering expertise, we have strengthened our path towards our 2025 break-even cash flow target,” says Polestar CEO Thomas Ingenlath.

Daniel Li, CEO of Geely Holding Group and member of the Board of Polestar, added: “As a strategic partner and direct shareholder of Polestar, Geely will continue to fully support the iconic performance car brand operationally and financially. We will retain our shares in Polestar and intend to participate in future financing activities as required. Polestar will have full access to Geely Holding’s technologies and engineering expertise to achieve its global growth objectives.”

In these special weeks for the company, Polestar has also achieved important steps in its own model range: As reported, production of the Polestar 4 started in November, the first units have already been delivered in China and exports to Europe are also planned for this year. And just this week, the start of production for the Polestar 3 was announced in China, while test production is also underway in the USA. Deliveries of the large electric SUV are set to begin in the summer, with the first units expected in Germany in the fall.

“This marks a new phase in Polestar’s business,” says Ingenlath. “The efforts of recent years are paying off: We have improved our cost base, secured financing and are ramping up our product offensive. Both SUVs are now sharpening the brand, targeting one of the fastest growing segments in the industry and positioning us for strong volume growth and an increase in profit margin from the second half of 2024.”



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