Here’s Why Polestar Had a Rocky 2023, before Decoupling from Volvo

• Polestar has revealed 2023 financial results after a delay, noting a drop in revenue compared to 2022 even though vehicle deliveries increased.

• The EV brand cited lower than anticipated demand in a number of key regions, in addition to higher material prices and other issues.

• Deliveries of the Polestar 3 SUV have begun, ahead of the market debut of the Polestar 4 later in the year.

For a year and a half we've heard of slowing demand even from EV giants like Tesla, with this trend having sparked some price wars as long ago as the start of 2023. A year later, evidence of an ongoing EV demand slump appears to be mounting.

For Polestar the year 2024 began with a decoupling from Volvo, but until late last week it was difficult to tell just how the picture looked for the brand over much of 2023.

The company submitted its 2023 financial reports with a delay of several months, even enduring a threat of a potential delisting from NASDAQ at one point. The delays have been linked to accounting errors.

"The previously announced errors identified in the company’s audited 2021 and 2022 accounts have now been corrected and as guided have an impact on net loss of less than 5% in each respective year—positively in one and negatively in the other," the automaker noted.

The EV brand announced revenue of $2.38 billion last year, representing a 3% decline from its 2022 levels.

The company recorded an operating loss of $1.46 billion in 2023, compared to a loss of $1.29 billion in 2022. The net loss for 2023 has been calculated at $1.17 billion, compared to $481 million in 2022.

The brand cited lower sales of carbon credits for the drop in revenue, while noting an increase in vehicle sales. Deliveries in 2023 grew 6% to 54,626 vehicles, compared to 51,549 in 2022.

Still, Polestar noted that its 2023 gross profit margin was in line with previous estimates, prior to the recognition of some non-cash impairment charges that totaled $450 million, some of them related to unsold Polestar 2 inventory.

"These charges were triggered by the lower than anticipated demand in certain key markets, which led to fewer cars being sold and an inventory buildup, alongside the impact from used cars which have started to come into inventory in a more meaningful way," the company noted.

Polestar also cited higher material and freight costs for the revenue drop, in addition to other factors such as higher cost of sales.

However, Polestar's unfortunate 2023 results should also be viewed in the context of relying solely on the Polestar 2 for sales throughout the year. Most competitors in the EV sphere have offered several vehicle models.

By comparison, the current year will see two new vehicle launches, with deliveries of the Polestar 3 having just begun in Europe and the US.

"This is an important milestone—first deliveries of Polestar 3 to our customers. Test drives start at all Polestar Spaces this coming weekend in Europe," said Polestar CEO Thomas Ingenlath.

Polestar 3 production began in February in Chengdu, China, while Volvo's plant in Ridgeville, South Carolina, is planned to launch Polestar 3 production later this summer. Deliveries of the Polestar 4 (also built in China) are slated to start in the fourth quarter.

Will the Polestar 3 and Polestar 4 allow the brand to quickly reverse these downward trends in the short term? Let us know what you think in the comments below.