Volvo and Geely may have to take Polestar private before it goes bankrupt, analyst says

One analyst believes Geely must take Polestar private if the EV maker wants to survive in an era of increasing competition in the sector.

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Polestar went public in the United States through a reverse merger with special purpose acquisition company Gores Guggenheim in an effort to raise the money needed to realize its electric vehicle ambitions. At the time, interest rates were low and inflation was believed to be transitory. While the Polestar 2 has proven to be a fantastic vehicle, the brand’s other models have been delayed and the stock has lost 84% of its value.

According to a research note cited by Bloomberg, Bernstein analyst Daniel Roeska expressed the view that Polestar is “on its way to nowhere,” mainly due to its inability to match Tesla and BYD’s aggressive price cuts.

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“We like the innovative asset-light strategy, we like the cars, but we don’t think the company should be a standalone stock,” he said. “Ultimately, we would like to see the concept and brand survive, but think it would make more sense for Polestar to eventually rejoin the Volvo Cars-Geely ecosystem.”

While Polestar is a listed company, Volvo Cars and Geely still own 88% of the shares and more than 93% of the voting rights. The company recently revealed it needs to close a $1.3 billion funding gap through 2025, when it says it will no longer burn cash.

Read: Polestar offers micro-lease deals in the US ahead of the market launch of three SUVs

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Last year, Polestar sold 54,600 vehicles, an increase of just 6% compared to 2022 and well below the 84% growth the year before. At the beginning of last year, the company set a target of delivering 80,000 vehicles by 2023, but fell well short of that target.

Polestar CEO Thomas Ingenlath has described the company’s stock market listing as a “meaningful exercise” and said that “anyone interested in the value of the company only has to look at the ticker to see that it is being priced at $4 billion traded.” He did not say whether Geely and Volvo have said when they can exercise patience before the company starts delivering results.

“Many companies in the EV sector have been affected and we are no exception,” Ingenlath acknowledged, but said he is confident 2024 will be a successful year for the company.