Yesterday I listened to the Investor Day of $PSNY (+1.59%) (Polestar) yesterday and would like to share my impressions with you here:
First of all, the new CEO of Polestar, Michael Lohscheller, really impressed me in the interview. His vision and enthusiasm for the brand and the products were clearly noticeable.
In general, several topics were discussed on the day:
- Platform strategy
- Change in the sales strategy
- CO² certificates
- Outlook
Platform strategy:
Polestar plans to harmonize its various platforms and build on an integrated platform in the future. This should increase efficiency and reduce costs. That sounds like a sensible step to me in order to remain competitive in the long term. Positive for me: the focus on cost efficiency and operational improvements to reduce cash burn.
Sales strategy:
I also found the change in sales strategy interesting. Polestar is moving away from pure direct sales and towards an active sales model with more retail partners (similar to the large automotive groups). The aim is to be closer to the customer and boost sales.
CO² certificates:
I think this topic will be particularly important this year, as the EU is threatening to impose fines in the billions. Carbon credits play an important role in the financing of Polestar. As Polestar sells zero-emission vehicles, the company acquires CO2 credits, the value of which is politically determined in the various markets. These credits have a financial value, which Polestar in turn invests in the future. In 2025, Polestar expects revenues in the three-digit million range.
Outlook:
Expansion was also a major topic. Although they are already active in many markets, they are focusing on France, one of the largest BEV markets in the world, in 2025. Other markets in Eastern Europe, Latin America and South East Asia are to follow.
They have also unveiled the Polestar 7, a compact SUV to be manufactured in Europe. With factories in the USA and South Korea, they are trying to produce in line with demand in the individual markets and minimize customs duties. I found it interesting to learn here that they are not planning their own factories, but are only considering the contract manufacturing model.
The following was announced about the finances:
The plan is to grow by 30 to 35% per year between 2024 and 2027. They are targeting positive adjusted EBITDA for 2025 and positive free cash flow after investments for 2027.
I continue to see further risks in the need for equity financing due to the high cash burn rate of EUR 100-120 million per month.
Basically an exciting company with great products. However, anything but a safe investment. Who of you is #polestar with us?
