After missing its sales targets in 2023, electric car maker Polestar is swinging the axe to cut costs, and reduce its reliance on its owners, Volvo and Geely.
The Sweden-based automaker confirmed to Reuters and Seeking Alpha that it plans to retrench 450 workers, or about 15 per cent of its workforce. Polestar’s overall headcount is low because it uses an “asset light” approach, with manufacturing done by Volvo and Geely.
A spokesperson for Polestar told the news agency the automaker is “reducing external spend and, regrettably, also our number of employees”.
The company delivered 54,600 cars in 2023, a small six per cent increase over its 2022 sales, and well below the initial target of 80,000, which was later revised down to 60,000. Polestar blamed a “challenging market” for missing its 2023 targets.
Among the challenges faced by automakers in 2023 were slowing growth for electric vehicles (EVs), and reduced EV subsidies in many jurisdictions. Tesla managed to keep sales growing by slashing prices.
In November 2023, Polestar accepted these changing conditions and outlined a new near-term plan focussing on its profit margins. It also secured an additional US$450 million ($685 million) in loans from Volvo and Geely.
CEO Thomas Ingenlath told the media Polestar will retain its premium positioning and concentrate on profitability, meaning it would not cut prices. At the time Polestar was planning to hit around 155,000 sales per year by 2025, down from an earlier target of 290,000.
Starting life in the late 1990s as a racing outfit, the company began tuning Volvo cars in the mid-2000s, and was bought out by Volvo in 2015. Two years later, Volvo and Geely announced Polestar would become a standalone brand focussing on electrified — later fully electric — vehicles.
After merging with a special purpose acquisition company (SPAC) in June 2022, Polestar has been listed on the tech-focussed Nasdaq stock exchange. Its share price has fallen by around 80 per cent since then.
Although it is now a public company, Volvo and Geely own almost 95 per cent of Polestar’s shares.