Polestar still wants to stay at the table

Author | Chai Xuchen

Editor | Zhou Zhiyu

After experiencing delisting warnings, layoffs, and other turmoil, Polestar's fate seems to be at another turning point.

On August 16th, Polestar's first national brand experience center opened in Shanghai. The new management team and Geely Holding Group CEO Li Donghui appeared one after another, actively expressing support for Polestar, providing reassurance to investors and stakeholders.

"As the 'big brother' of Polestar, Geely will support its independent development globally and in China, and will timely participate in Polestar's financing plans. Geely's technology, resources, and supply chain system will also be fully open to Polestar." Li Donghui firmly endorsed it, because in his view, Polestar is the vanguard of Geely's globalization.

"One of the missions of the Chinese automotive industry is to enter Western markets, but the reality is that Chinese brands are difficult to be truly accepted. Polestar is an important strategic starting point for Geely's globalization." Polestar Technology Chairman and CEO Shen Ziyu once admitted.

"Whether it's channels, brands, or networks, Polestar is already selling in the European Union, and can also produce in the United States, South Korea, Zhangjiakou, Taizhou, and Chengdu factories in China. This proves Polestar's ability to layout globally, something that many car companies find difficult to achieve." Shen Ziyu said confidently.

However, born with a silver spoon, this luxury electric car brand, which originated from Volvo's high-performance department and is a joint venture between Volvo and Geely Group, did not follow the expected glorious path.

In July of this year, due to failure to disclose its annual report in a timely manner, Polestar received a delisting warning from Nasdaq. Its stock price has also plummeted from the initial high of $13 to the current $0.89, shrinking its market value by 93% to only $1.9 billion. Nordea Bank even gave Polestar a valuation of 0 kronor.

Behind all this is a hurdle that Polestar has always struggled to overcome - scale.

Financial reports show that in the first quarter of this year, Polestar's deliveries plummeted by 40% to 7,200 units. In the previous three years, although Polestar's sales volume had been gradually increasing, until last year, its global delivery performance was only 54,600 units, averaging less than 5,000 units per month.

The persistent inability to break through in scale has led to high production costs for Polestar, and losses have become the norm. The accumulated losses from 2021 to 2023 amount to $2.016 billion, with the remaining cash on hand facing "depletion," standing at $789 million as of the first quarter of this year.

Polestar has already reached a crossroads in its fate.

Under pressure, Polestar's China headquarters recently relocated from Shanghai to Nanjing, and there have been adjustments in personnel structure. Qinpengji, a capable sales veteran from Geely, was reassigned to Polestar Technology as COO, responsible for sales, channel development, and marketing.

However, Polestar has just begun to correct its course. To truly establish itself in the industry and play a key role in Geely's overseas expansion as a "vanguard," there are still many deep-rooted issues waiting to be addressed.

In the eyes of industry insiders, Polestar's biggest challenge lies in its wavering brand positioning. As an independent electric high-performance car brand, Polestar initially benchmarked Tesla and imitated its development path Positioning itself as a high-end luxury brand, it aims to compete with Porsche while also trying to get closer to the masses to support its scale. Currently, it has four models with prices ranging from 300,000 to 1.5 million yuan.

However, the results have not been satisfactory, and it has failed to grasp the demands of the Chinese market, appearing to be "isolated and out of touch". Among them, the Polestar 2 and Polestar 4 bear the heavy burden of sales volume, but the market feedback is mediocre, with 5,000 and 1,200 units delivered globally in the first quarter, respectively.

Insiders close to Polestar point out that part of the reason lies in the frequent changes in management. With six changes in leadership in six years, the company's strategy has become difficult to unify and execute.

At present, Shen Ziyu admits that he is well aware of the pressure from investors and needs to be accountable to the board of directors and shareholders, but this will take some time to adjust.

After a series of intensive adjustments, Polestar has gained crucial endorsement from Geely and additional investments from local state-owned assets. Moreover, it has a vast platform structure, intelligent interstellar charm, and many other advantages to match the demands of the Chinese market.

After securing resources and stabilizing morale, Qin Peiji has prescribed a remedy for Polestar - to build confidence in sales: "This is the most urgent task at hand. We not only need to emphasize the brand and quality but also the spiritual appeal. Therefore, we need to cultivate confidence in sales personnel and drive their understanding of the brand concept."

Qin Peiji believes that Polestar's brand accumulation is sufficient, which opens up the possibility of breaking through. "In the brand definition of Polestar in China, the first thing is pure design. Each of us has the ability to recognize beauty and ugliness, and many times, the so-called confusion is just due to external noise."

Shen Ziyu revealed that the company made significant investments in the brand and channels in the first half of the year. As for sales expectations, he said, "I told Qin Peiji, I'll give you six months, you answer the sales issue."

While "educating the market," Shen Ziyu is also determined to keep up with the competitive situation and accelerate new product launches. He stated that the upcoming Polestar 7 and Polestar 8 will be the first to be launched in the Chinese market, led by the Chinese team in product definition. "We have already discussed and researched with Geely Holding Group, striving to launch in the Chinese market at the fastest speed within the next two years."

According to previous plans, Polestar aims to account for more than 30-40% of sales in the Chinese market and challenge the top three in global luxury electric vehicle sales in China.

From product to channels, to organizational structure and technological aspects, this Swedish high-end brand is preparing for its "rebirth" battle. But whether it can ultimately reshape the Polestar brand and drive sales by awakening the demand of high-end consumers remains to be seen. In the industry's view, this is undoubtedly a high-stakes gamble.

However, time is of the essence, and Polestar's role within the Geely system is gradually changing.

With brands like Lynk & Co and ZEEKR successfully positioning themselves in the mid-to-high-end market in China and accelerating their international expansion, Polestar's scarcity is facing a reduction. This restructuring may be one of its few remaining opportunities to stay in the game