Polestar, a Swedish electric vehicle maker, reported a smaller third-quarter operating loss as revenue more than doubled and spending was cut. The company’s shares soared 25% in early trading, but it warned that higher raw material costs would start to impact later in the year. Despite an operating loss of $196.4 million, down from $292.9 million a year ago, revenue rose significantly to $435.4 million from $212.9 million. Rising costs for raw materials used in battery production had not fully hit Polestar due to set contracts, but the company expects to face higher costs in the fourth quarter.
Redburn analyst Charles Coldicott noted that despite the share price increase, there was not enough support for this reaction during the conference call with analysts. Chief Financial Officer Johan Malmqvist explained that Polestar would face higher costs in the fourth quarter, with slow price increases for cars this summer causing a delay in offsetting raw material costs. Exchange rate fluctuations also impacted the company’s cost base in China, and supply chain bottlenecks, including a global semiconductor shortage, have made it difficult for carmakers to meet targets.
Polestar’s Chief Executive Thomas Ingenlath expressed confidence in the company’s ability to deliver 50,000 cars in 2022, with 9,215 vehicles delivered in the third quarter and a 100% increase in deliveries for the first nine months of the year, totaling around 30,400 cars. Ingenlath stated that the remaining 20,000 cars needed to meet the target have already been produced, putting the company in a comfortable position to focus on delivery rather than production concerns. Despite challenges such as higher raw material costs and supply chain disruptions, Polestar remains optimistic about achieving its production goals for the year.
In an effort to mitigate the impact of rising raw material costs, Polestar plans to raise prices further on its vehicles. The company, which listed on the Nasdaq exchange in June through a merger with a special-purpose acquisition company, has seen significant growth in revenue but faces challenges in maintaining profitability due to increasing costs. Despite this, Polestar’s leadership remains committed to meeting their production targets and ensuring that the company continues to expand its presence in the electric vehicle market.
Polestar’s performance in the third quarter reflects a combination of growth in revenue, cost-cutting measures, and challenges related to raw material costs and supply chain disruptions. The company’s ability to deliver 50,000 cars in 2022 demonstrates a strong commitment to its production goals despite external factors impacting the automotive industry. By focusing on raising prices to offset rising costs and maintaining a steady production pace, Polestar aims to navigate through challenges and position itself as a competitive player in the electric vehicle market.
Overall, Polestar’s third-quarter results showcase both the opportunities and challenges facing the electric vehicle industry. While revenue growth and production targets demonstrate the company’s potential for success, higher raw material costs and supply chain disruptions present significant obstacles. By implementing strategic pricing adjustments and maintaining a focus on production and delivery, Polestar aims to overcome these challenges and continue its growth trajectory in the competitive EV market.
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