Electric vehicle (EV) maker Polestar (NASDAQ:PSNY) said it will have to take steps to offset hefty EU and U.S. import tariffs on its Chinese-made electric cars as it posted a first-quarter operating loss on Tuesday.
The company said that the tariffs and pressure on car prices meant it would need to take "mitigating measures" to achieve its cashflow breakeven target for 2025. These could include cost reductions across Polestar's supply chain or other actions, but will not include further job cuts, a spokesperson said.
The Swedish company, controlled by China's Geely, makes all its EVs in China, but its new model, the Polestar 3, will be made in the United States from the end of this summer and its Polestar 4 in South Korea from the second half of next year.
Until then, it will incur provisional tariffs of 20% for the cars it brings into the European Union under a proposal by the European Commission and more than 100% for the United States.
The Polestar 2, its biggest seller, will continue to be made in China.
The company's statement is the strongest yet by an EV maker on the impact of the tariffs. Rival Tesla (NASDAQ:TSLA) has said it would raise its European prices to cover the cost of tariffs for its China-made EVs. Polestar did not mention any price rises and the company told Reuters the tariffs would not cause any customer delays.
U.S.-listed shares in the company were down 7% in premarket trading after it earlier reported a first-quarter operating loss of $231.7 million, with revenue down to $345.3 million from $543.4 million a year earlier.
Analysts at Bernstein said in a note to clients that the rise of global tariffs makes Polestar's global production untenable.
"Polestar will be constrained which cars it can sell where (US, CN, EU) until it can find a way to re-domicile production in each of the three regions - requiring more funds as well", it said.
In a call to analysts and shareholders, chief executive Thomas Ingenlath said the company also looked to move production to Europe, but did not give further details.
Like others, Polestar faces a worsening demand outlook for EV makers, where a price war started last year by Tesla has left many automakers struggling to sell cars they have already produced.
For the second quarter of the year, Polestar said it delivered around 13,000 cars, below the 15,500 expected by analysts at Bernstein.
In its quarterly report, the automaker said its results had been hit by both lower sales and higher discounts.
"More than ever, the company's fortunes now hinge on the Polestar 3 and 4," the broker said in a note to clients.
