Sunita Somvanshi
Swedish electric vehicle maker Polestar is facing serious financial challenges after reporting a staggering $1.03 billion net loss for the second quarter of 2025. This loss, much wider than the $268 million reported a year earlier, was largely caused by a $739 million writedown on its Polestar 3 SUV.
The company slashed the value of the Polestar 3 to just $25 million, citing two main problems: higher US tariffs on imported car parts and growing price pressure in the electric vehicle market. These challenges have forced Polestar to rethink its approach to the American market.
“We will not grow in the US at any cost, because the financial exposure is then too high,” Polestar stated during a post-earnings call. This caution makes sense when looking at their sales figures – only 8% of Polestar’s sales came from the US in the first half of 2025, while Europe generated 77% of their business.
The company’s financial issues reflect broader struggles in the EV industry. US sales fell down in the second quarter as American buyers increasingly chose hybrid and gasoline vehicles over all-electric options. While Polestar has offered discounts in Europe to boost sales, these promotions haven’t created much momentum in the US market.
Despite these challenges, the company saw some positive signs. Revenue actually increased by 37% to $791 million compared to the same period last year, driven by higher sales volumes in Europe. The company sold 18,049 cars in the second quarter, up 38% from the previous year.
Polestar isn’t facing these challenges alone. Its parent company, Volvo Cars, which produces the Polestar 3 at its South Carolina factory, also recorded similar impairment charges related to its ES90 and EX90 models due to tariffs and launch delays.
To strengthen its financial position, Polestar received a $200 million investment from Geely owner Li Shufu through PSD Investment in June. The company ended the quarter with $719 million in cash and has worked with creditors to revise debt agreements to remain compliant with loan requirements.
Looking ahead, Polestar is adjusting its strategy by shifting manufacturing closer to end markets to reduce tariff exposure. The company has confirmed plans for European production of its future Polestar 7 model in Slovakia, scheduled to launch in 2028.
Polestar previously aimed for cash-flow break-even by 2025, later moved that target to 2027, and has now suspended forecasts altogether due to tariff uncertainty. Despite these setbacks, the company continues to target sales growth of 30-35% between 2025 and 2027.
The company’s shares fell about 11% following the announcement as investors digested the significant quarterly loss and ongoing market challenges.
