Sunita Somvanshi
Swedish electric vehicle maker Polestar has secured a $200 million equity investment from PSD Investment, controlled by Geely Holding Group founder Li Shufu. The June 16, 2025 deal provides essential working capital for the company, which lost $2 billion in 2024 despite delivering 44,851 vehicles.
The funding comes through a private investment in public equity (PIPE), with Polestar selling 190,476,190 new Class A American Depository Shares at $1.05 each. To keep voting power below 50%, PSD Investment will convert 20 million shares to a different classification.
“The investments have laid the foundation for the company’s continuing growth,” said CEO Michael Lohscheller in a June 2 shareholder letter. “We expect 2025 to be the strongest year in Polestar’s history” for sales and financial performance.
Early signs suggest improvement. Q1 2025 saw a 76% year-over-year sales increase with over 12,300 vehicles delivered. Net revenue grew by $278 million (84.2%), driven by higher volumes and a favorable product mix. The company also reported a positive 7% gross margin, a 15 percentage point improvement from the previous year.
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This investment follows a rocky period for Polestar. The company received a Nasdaq non-compliance notice in July 2024 for failing to meet the $1 minimum bid price requirement, though the stock recovered above $1 by September. Analysts currently rate Polestar as “Underperform” with an average target price of $1.45.
To counter tariff challenges and boost U.S. presence, Polestar began producing its Polestar 3 SUV at Volvo’s South Carolina plant in 2024—its first American-made vehicle. The company also expanded into France in June 2025, offering the Polestar 2, 3, and 4 models.
Polestar’s strategy focuses on:
- Product diversification with five performance EV models planned by 2026
- Manufacturing diversification (U.S. production for Polestar 3, planned European production for Polestar 7)
- Premium positioning rather than engaging in price wars
- Cost reduction and efficiency improvements to address the “unsustainable cash burn rate” of $100-120 million monthly in 2024
- Expanding retail presence from 70 to 130 spaces in Europe and 36 to 57 in North America
The company faces significant headwinds in a challenging EV market characterized by softening demand, price competition, and regulatory uncertainty. However, Geely’s continued backing provides stability as Polestar works toward its target of cash flow break-even by 2027.
For consumers, the funding supports continued development of competitive vehicles like the Polestar 3, which offers approximately 300 miles (483 kilometers) of driving range. The financial boost also enables Polestar to maintain features like over-the-air software updates while expanding its model lineup to serve more market segments.
