---
title: "Polestar Automotive UK's luxury dream is still far away"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/107701950.md"
description: "AB Volvo (publ) has dropped a big \"burden\"."
datetime: "2024-02-08T04:45:26.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/107701950.md)
  - [en](https://longbridge.com/en/news/107701950.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/107701950.md)
---

> Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/107701950.md) | [繁體中文](https://longbridge.com/zh-HK/news/107701950.md)


# Polestar Automotive UK's luxury dream is still far away

Author | Chai Xuchen

Polestar Automotive UK, a high-end subsidiary brand under AB Volvo (publ), has been abandoned.

On February 1st, AB Volvo (publ) announced that it will no longer provide funding to Polestar Automotive UK. The company will focus its financial resources on meeting its own needs and is considering transferring its shares in Polestar Automotive UK to other shareholders.

The other shareholder is GEELY AUTO. On the same day, GEELY AUTO Holdings announced its support for AB Volvo (publ)'s decision. If the equity adjustment is completed, GEELY AUTO Sweden Holdings, a subsidiary of GEELY AUTO, will become an important new shareholder of Polestar Automotive UK, and GEELY AUTO Holdings will continue to provide operational and financial support to the Polestar Automotive UK brand.

Thus, Polestar Automotive UK, which was supported by both GEELY AUTO and AB Volvo (publ), has become solely supported by the major shareholder, GEELY AUTO.

Affected by this news, the stock price of AB Volvo (publ) soared by more than 30%. Industry analysts believe that Polestar Automotive UK, which has been in a loss-making state, has consumed too many resources of AB Volvo (publ).

Last year, Polestar Automotive UK delivered 54,600 new cars worldwide, failing to achieve its annual sales target of 60,000 units. In China, the largest new energy vehicle market, its presence is even lower. Insurance data shows that from 2021 to 2023, Polestar Automotive UK's deliveries in China were 2,048, 1,717, and 1,100 units, respectively.

With poor sales, Polestar Automotive UK is inevitably under financial pressure, and both AB Volvo (publ) and GEELY AUTO have had to continue providing financial support to the company, which is still in a loss-making state. In the first three quarters of last year, Polestar Automotive UK had an operating loss of 735 million US dollars, with a profit margin of only 1.1%.

Therefore, even if Polestar Automotive UK promises to achieve profitability by 2025 with an injection of 14 billion SEK (9.5 billion RMB), AB Volvo (publ) has clearly run out of patience and is unable to bear this "big cake" any longer. Investors are also voting with their feet. Polestar Automotive UK, which has been listed for less than two years, has seen its stock price drop from $10 per share at the IPO to less than $2, resulting in a market value decline of over 80%.

Polestar Automotive UK, which has always positioned itself as a high-end performance brand, has finally been awakened by the harsh reality. Now, it has to tighten its belt and announced at the end of January that it will lay off approximately 450 employees worldwide.

Looking back to 2017, Polestar transformed from the high-performance tuning department of AB Volvo (publ) to an independent high-performance electric brand jointly owned by GEELY AUTO and AB Volvo (publ), known as "Polestar Automotive UK".

At that time, the electric vehicle market had not yet taken off, Tesla had not built a factory in China, and Xiaopeng Motors was still busy preparing its products. The domestic electric vehicle market was still in the stage of "switching from gasoline to electricity", and the high-end electric vehicle market was an untapped blue ocean.

With the mission of challenging the luxury electric vehicle market, Polestar Automotive UK received the favor of GEELY AUTO and AB Volvo (publ). Under the leadership of Li Shufu, it went public in 2022 and its market value once surpassed traditional automakers such as Nissan and Renault.

However, despite having the support of two major players, Polestar Automotive UK, which reached its peak as soon as it debuted, encountered a series of setbacks.

From 2017 to 2023, Polestar Automotive UK released four models: Polestar 1, 2, 3, and 4. However, none of them were able to establish a strong reputation in the market.

On one hand, the prices of the products fluctuated greatly, ranging from million-dollar sports cars to mass-market models priced at 300,000 to 400,000 yuan. The positioning was constantly adjusted, which not only failed to generate popular models for Polestar Automotive UK but also blurred the brand identity and market perception.

At the same time, due to product planning issues, it took 1-2 years for Polestar Automotive UK to deliver its first two models. The Polestar 3, which was supposed to be delivered last year, was delayed until the first quarter of this year due to research and development factors.

In addition, frequent changes in the senior management in the Chinese market led to the strategic focus of Polestar Automotive UK constantly shifting between Europe, the United States, and China. The strategies proposed by the senior management, such as "maintaining brand identity without lowering prices" and "building the brand first before pursuing volume," were out of touch with the reality of the automotive market.

Years of chaos have caused damage to the Polestar Automotive UK brand, reputation, and sales. Clearly, the aloof Polestar Automotive UK has failed to adapt to the current fast-paced environment and has missed the opportunity for the high-end electrification of the Chinese electric vehicle market. After AB Volvo (publ) proposed a "breakup" and Geely Auto took over, no one can give an answer as to whether Polestar Automotive UK, which is trapped in a niche market, can be saved. However, what can be certain is that if Polestar Automotive UK wants to continue to survive, it must learn to lower its posture and return to reality, and seek opportunities in the Chinese market with the help of Geely Auto.

In June of last year, Polestar Automotive UK announced the establishment of a joint venture with Starry Meizu called "Polestar Automotive UK Technology," taking over Polestar Automotive UK's business in the Chinese market. Starry Meizu holds a 51% stake and will be responsible for arranging future financing for the company.

For Polestar Automotive UK, cooperation with Starry Meizu also means readjusting its strategic focus to the Chinese market and being incorporated into the Geely Auto family, which is expected to provide comprehensive support in terms of technology, channels, and finance.

At the Guangzhou Auto Show in November last year, Shen Ziyu, Chairman of Polestar Automotive UK Technology, set the tone for leveraging the advantages of intelligent software to enter the Chinese electric vehicle market. Polestar Automotive UK also defines 2024 as the "year of breakthrough" for the brand in China.

According to the plan, Polestar Automotive UK aims to be among the top three luxury electric vehicle brands in global sales in the Chinese market by 2024. The first model, Polestar 4, is developed specifically for the Chinese market, based on the vast platform and equipped with Meizu's intelligent cockpit system.

The number of sales channels in China will expand from the current 55 to 120 by the end of this year. In addition, Geely Auto has appointed Chen Siying, who has "experience in operating high-end brands" and has been in charge of Lynk & Co, as the COO of Polestar Automotive UK Technology.

Next, Polestar Automotive UK has Polestar 3 and 4 waiting for delivery this year, while the Polestar 5 and 6 models in the research and development pipeline are expected to be unveiled in the next two years, all of which require a large amount of funding. Additionally, Polestar Automotive UK needs to address the shortcomings exposed in product strategy, market layout, and production capacity allocation, while also facing challenges from domestic new forces and even Geely Auto's "sister" brand, ZEEKR.

It can be said that Li Shufu, who "incorporated" Polestar Automotive UK, has modified the "script" for it, giving this Swedish race-bred car company hope for a "rebirth". However, under the umbrella of GEELY AUTO, ZEEKR, Lynk & Co, and Lotus are all "beloved sons" of the high-end series. If Polestar Automotive UK wants to be reborn, its own efforts are still crucial. The dream of reaching the pinnacle of luxury cars is still a long way to go.

### Related Stocks

- [GEELY AUTO (00175.HK)](https://longbridge.com/en/quote/00175.HK.md)
- [Polestar Automotive Holding UK PLC (PSNY.US)](https://longbridge.com/en/quote/PSNY.US.md)
- [AB Volvo (publ) (VLVLY.US)](https://longbridge.com/en/quote/VLVLY.US.md)

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