In the rapidly evolving landscape of the electric vehicle (EV) market, competition has intensified dramatically, leading to significant challenges for many players in the fieldOne company that has found itself in troubling waters is Polestar, a brand that has been making waves in the electric segment but is now facing serious hurdlesAs outlined in its recent third-quarter financial report for 2024, Polestar is grappling with a severe downturn in revenues and vehicle sales, compounded by a troubling shift from positive to negative gross marginsDespite these significant obstacles, the management has boldly declared a commitment to profitability by 2025, presenting a 'military order' for the company to bounce back.

The stakes are high for PolestarWith a recent history of narrowly avoiding delisting, the question arises: How can this brand navigate through its current turmoil? The financials reveal a stark picture; Polestar's revenue for the third quarter of 2024 stands at $551 million, marking a 10% decline compared to the same period last year

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Over the first nine months of 2024, the total revenue further plummeted to $1.457 billion, reflecting a 21% decrease year-on-year.

This revenue decline is primarily attributed to a noticeable drop in units sold, fierce market competition, increased discounting, and delays in the launch of new vehicle linesSpecifically, Polestar recorded cumulative sales of just 44,900 vehicles in 2024, a 15% drop from the previous year, while the volume for the first three quarters saw a sharp 21% decrease, totaling 32,600 vehicles.

Central to the company's struggles is its flagship model, the Polestar 2. Sales figures for this vehicle have significantly tumbled, with only 10,300 units sold in the first three quarters of 2024, compared to an impressive 53,700 units sold in 2023. This sharp decline can be viewed in the context of a changing automotive landscape in China, where numerous new models have flooded the market, notably from competitive brands such as BYD, Xpeng, and NIO, which offer more competitively priced alternatives.

Additionally, on the international front, established players like Tesla hold considerable sway, backed by strong brand recognition and high-performance vehicles that excel in areas such as range and intelligent driving capabilities

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These market dynamics have effectively squeezed Polestar's share, resulting in a diminished sales footprint.

Brand perception appears to further complicate Polestar’s situationEven as consumer knowledge of electric vehicle brands has expanded, brand strength has emerged as a key decision factor in the purchasing processIn this dimension, Polestar's relatively muted brand influence could significantly hinder its market success compared to its more established rivals.

On the profitability front, the company conceded a concerning shift in its gross margin, which fell to -2.4%, a drop of 3.4 percentage points year-on-yearThis transition from a positive to a negative gross margin indicates severe deterioration in the company's profitabilityTo put things into perspective, Polestar posted a staggering net loss of $863 million in the first three quarters of the previous year, representing a 67.25% increase in losses.

Faced with these pressing concerns, Polestar seems determined to implement sweeping changes at the executive level as a form of self-preservation in this turbulent environment

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Over the past six months, the company has seen a complete overhaul in its global leadership team, affecting positions from the CEO to the CFOChanges are also taking place at Polestar Technology in China as brand resilience shifts are enacted.

A notable appointment was made on January 5, with Jonas Engström being named the new Chief Operating Officer, tasked with overseeing the delivery of Polestar's expanding automotive projects and managing the daily operations of the companyEngström's background includes senior roles at Volvo, most recently as the Vice President of Product and Project Management before his promotion to COO.

This shake-up began in August of the previous year when Thomas Ingenlath, the founder and CEO of Polestar, announced his resignation, leading to Michael Lohscheller taking over the top position

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Lohscheller brings a wealth of experience from his past roles at other automotive firms, including serving as the CEO of Stellantis’ Opel brand and VinFast in Vietnam.

The CFO role also underwent a transition, with Jean-Francois Mady stepping into the position following a strong background in automotive finance across multiple marketsMady’s prior experience includes significant roles at Stellantis, where he managed global accounting operations.

Interestingly, the trends of leadership changes continue in China, where eight years have witnessed seven different CEOs for Polestar ChinaThis rapid turnover reflects a challenging environment, as the company seeks to adapt to local market conditions.

The latest structural changes were completed recently, with Su Jing of Xingji Meizu appointed as the chairman of Polestar Technology, signaling a potential shift in strategy and focus for the firm.

Amid these leadership transitions, Polestar has also outlined its latest strategic development vision

The company's ambitious plan aims for an annual average retail sales growth of between 30% and 35% from 2025 to 2027, with a strong focus on achieving profitability by 2025.

To meet these lofty targets, the automaker has laid out the introduction of two new models: the high-performance Polestar 5, designed to be a four-seater tourer, and the Polestar 7, a premium compact SUVThe Polestar 5 is expected to hit the market in the latter half of this year, while Polestar 7 is set for production in Europe, although the exact launch details remain shrouded in uncertainty.

However, many market observers are skeptical of Polestar’s optimistic outlook, especially considering the recent evasion of a delisting crisis in 2024. The hurdles ahead may be manifold, and the road to recovery could prove to be a challenging expedition for the beleaguered brand.