EV firm Polestar expects positive fourth-quarter gross margin despite slow demand

(Reuters) -Polestar said on Friday that it expected to achieve a positive gross profit margin in the fourth quarter despite its electric vehicle deliveries falling 14% in the third quarter.

Shares of the Swedish company fell 3.8% in premarket trading.

Polestar (NASDAQ:PSNY), which is majority owned by China’s Geely, has been grappling with weakening demand for its vehicles owing to factors such as high interest rates, prompting consumers to pivot to cheaper hybrid cars.

Polestar recently went through a major reshuffle where it replaced its CEO, head of design, board chair, and appointed a new CFO.

New CEO Michael Lohscheller, in his first public statement since taking over on October 1, said on Friday that he saw a great foundation to build upon and that it was conducting a review of its strategy and operations.

The company said it will provide an update on business and strategy along with its full third-quarter financials on January 16.

Polestar said it expects revenue for the full year to be similar to last year owing to the difficult market conditions and the import duties which have hit the automotive industry. In 2023, the company recorded revenue of $2.38 billion.

Polestar also reaffirmed its target of achieving break-even cash flow by the end of next year, but at a lower volume than previously targeted.

The company handed over 11,900 vehicles in the third quarter compared with 13,900 vehicles a year ago.

The levy of U.S. and European tariffs on Chinese imports has pressured Polestar to grow its production base in the United States and away from China where it currently makes most of its vehicles.

The company said in August that it reached its target of achieving $1.3 billion in external funding.

On Friday it said due to the current market conditions and the anticipated performance, it was engaged in constructive dialogue with its club loan lenders, who remain supportive of its loan covenants.