Finvest
PSNY Electric Vehicles · EV maker · Turnaround · Geely backed · Thesis updated July 19, 2026

Polestar's rescue depends on richer SUVs

01 Running thesis

A funded but fragile reset

The bull case is simple: Polestar may have bought itself enough time. It converted about $640 million of shareholder loans into equity and raised $1 billion of new external equity with support from Geely Sweden Holdings. That lowers near-term capital structure risk, which had been one of the biggest worries.

The product story also looks better than it did when Polestar relied mostly on the Polestar 2. Polestar 4 is now the best-selling model and made up just over half of volume in 2025. If that car carries better margins, and if South Korea production helps with tariffs and costs, the mix can improve.

The bear case is still serious. The US has become a much smaller market for Polestar, falling to 7% of 2025 retail sales from 16% in 2024. Tariffs, lost tax credits, and weak EV pricing helped drive $1.1 billion of 2025 impairments across Polestar 2, Polestar 3, and development projects including Polestar 5.

This is a turnaround, not a clean growth story. Finn should watch gross margin, cash burn, and whether the dual retail model can sell more cars without forcing bigger discounts.

Apr 2026→The view now reflects a major balance sheet reset, with about $640 million of shareholder loans converted to equity and $1 billion of new external equity raised. The same update also showed negative 35% gross margin in 2025 after $1.1 billion of impairments, so the risk profile did not simply improve.
Nov 2025→Management said future models will use group technology platforms, which should lower development needs. The US also stayed weak, representing 8% of retail sales for the first 9 months of 2025 versus 16% in 2024.
Sep 2025▼Polestar confirmed that Polestar 7 will be made in Kosice, Slovakia with Volvo Cars, a helpful future cost and tariff signal. But first-half gross margin was hurt by a $739 million Polestar 3 impairment.
May 2025▼The US market became a much bigger concern as tariffs and tax credit changes weighed on demand. Polestar 4 becoming more than half of volume helped the mix, but the impairment burden rose sharply.
May 2025→The 20-F showed a shift toward a dual retail model outside the US and added Polestar 7 to the pipeline. It also confirmed that margin and tariff risks remained central to the thesis.
Aug 2024→Polestar started Polestar 3 production in South Carolina and secured up to $300 million of new external funding. New EU tariff risk and a NASDAQ share price deficiency kept the turnaround risky.
Feb 2024→The original setup was a move from a one-car story to a three-car portfolio led by Polestar 3 and Polestar 4. Funding improved, but weak margins and impairments on the older Polestar 2 platform were already clear.
02 Business model

Premium EVs without owning most factories

Polestar sells electric cars, plus smaller add-ons like software and performance upgrades, leasing, and carbon credits. The main money still comes from selling vehicles.

The company is asset-light. That means it uses Volvo Cars and Geely plants, supply chains, and technology instead of building every factory and platform itself. This can save cash and speed up launches, but it also makes Polestar dependent on related parties for manufacturing, pricing, timing, and future technology.

Outside the US, Polestar is moving from mostly direct sales to a dual model. It plans to combine direct-to-customer sales with wholesale channels and active selling partners. The goal is wider reach and better inventory control, but wholesale can also pressure margins if dealers demand discounts.

Future models will use Geely Group technology platforms more fully. That should cut research and development needs, but it also means Polestar has less control over the core tech that makes its cars different.

03 Product portfolio

The lineup is moving upmarket

Growth engine

Polestar 4

The SUV coupe is now Polestar's volume leader, making up just over half of 2025 volume. It is built in China and South Korea, which matters because tariff exposure changes by source country.

Steady

Polestar 2

The fastback is the older core model. It still matters for brand presence, but it has faced heavy margin pressure and was part of the 2025 impairment charges.

Growth engine

Polestar 3

The luxury SUV is important for higher-priced sales. US production in South Carolina helps support the US market, although parts and tariff exposure still need watching.

Option

Polestar 5

The grand tourer is expected in summer 2026. It is part of the premium push, but development projects including Polestar 5 were included in 2025 impairment expenses.

Option

Polestar 6

The roadster is expected in 2027. It is more of a brand and halo model than the near-term profit engine.

Option

Polestar 7

The premium compact SUV is planned for production in Kosice, Slovakia with Volvo Cars. A European-built model could reduce tariff risk and improve local market fit.

04 Business segments

Europe now carries the company

Europe78%growing fast
United States7%declining
Other markets15%modest

Mix is based on 2025 retail sales from the internal thesis. Europe was 78%, the US was 7%, and other markets make up the remaining 15%, so the business is now much more Europe-heavy than management once planned.

05 Risk factors

What could still break

Margin repair fails

High impact · High odds

Gross margin was negative 35% in 2025 after $1.1 billion of impairments. Even excluding those charges, Polestar still has to sell EVs in a market where rivals cut prices often. If Polestar 4 and Polestar 3 do not lift gross margin, the equity raise only buys time.

We watchQuarterly gross margin, vehicle discounting in Europe, and management comments on cash flow.

Tariffs block the US comeback

High impact · High odds

The US fell to 7% of 2025 retail sales from 16% in 2024. Polestar has some protection from Polestar 3 production in South Carolina and Polestar 4 imports from South Korea, but tariffs can still hit parts and finished vehicles. A weaker US market also makes the global growth story less balanced.

We watchUS retail sales share, US tariff rulings, and whether Polestar 3 sales grow from South Carolina production.

Related-party dependence tightens

High impact · Medium odds

Polestar leans on Volvo Cars and Geely for plants, platforms, funding support, and technology. That lowers spending needs, but it can reduce Polestar's control over product timing and costs. If partner priorities shift, Polestar may have fewer choices than a fully independent carmaker.

We watchNew manufacturing agreements, platform decisions for future models, and any change in Volvo or Geely support.

Europe becomes too concentrated

Medium impact · High odds

Europe made up 78% of 2025 retail sales. That gives Polestar a clear main market, but it also raises exposure to European EV price wars, subsidy changes, and proposed tariffs on China-made EVs. The EU had proposed a 19.3% tariff level for Geely, Volvo, and Polestar.

We watchEuropean order intake, EU tariff updates, and pricing actions by premium EV rivals.

Listing pressure returns

Medium impact · Medium odds

Polestar has faced a NASDAQ deficiency tied to its share price trading below $1. A delisting risk can hurt liquidity and scare away some investors. It can also make future capital raises harder if the turnaround takes longer.

We watchNASDAQ compliance notices, share price relative to $1, and any reverse split proposal.
06 Quick answers

In one breath

Is Polestar owned by Volvo or Geely?

Polestar is a public company, but it depends heavily on Volvo Cars and Geely. Those partners support manufacturing, technology, and funding, which helps Polestar stay asset-light but creates dependence.

Why did Polestar's US business shrink?

The US became harder because of tariffs and the loss of EV tax credit support. The US was 7% of 2025 retail sales, down from 16% in 2024.

What is the main bull case for PSNY stock?

The bull case is that Polestar 4 and Polestar 3 improve margins while the new equity and debt conversion reduce balance sheet stress. Investors also need to see progress toward positive cash flow.

What should investors watch next?

Watch gross margin, cash burn, Polestar 4 volume, US sales share, and the Polestar 7 launch path in Slovakia. Those signals show whether the turnaround is becoming real.