Geely Holding and Volvo Cars have provided additional liquidity to the Polestar.

Amending its existing shareholder term loan, Volvo Cars has extended the maturity of its outstanding term loan by over three years to June 2027 and provided an aggregate of US$200m in additional loan capacity with the same maturity date, bringing the total investment to $1bn.

Geely Sweden Automotive Investment (an affiliate of Geely Holding) is making available a $250m term loan on substantially the same terms as Volvo Cars, including the maturity in June 2027.

Both loans have an optional equity conversion feature.

Based on the reduced funding need from a strengthened business plan and new and existing financing and liquidity support from Geely Holding and Volvo Cars, Polestar expects it will require external funding of approximately $1.3bn until achieving cash flow break-even, targeted in 2025.

Polestar said had progressed well on a financing plan to provide the remainder of funding required, including additional debt and equity.

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By GlobalData

A strengthened business plan targets an accelerated margin improvement and a reduction of the total funding need to the point of cash flow break-even in 2025.

The plan prioritises margin progression over volume. For fiscal year 2025, Polestar is targeting a gross margin in the high teens with a total annual volume of approximately 155,000-165,000 cars. This is expected to be achieved through a richer product mix, with four models in production, reduced cost structure and refocused approach to key markets including a new joint venture in China and measures to improve profitability in the US business.

Polestar has already implemented cost reductions announced earlier this year around headcount reductions and continues to advance active cost management efforts.

Thomas Ingenlath, Polestar CEO, said: “By having taken the necessary steps to rework our business plan, we are reducing costs and improving efficiencies to create a more resilient and profitable [company] and reducing our funding need at the same time.

“Achieving cash flow break-even already in 2025 will show the strength of our asset-light business model. Margin over volume is our way forward.”