Swedish electric-vehicle maker Polestar said Friday that its third-quarter operating loss narrowed from a year ago as revenue more than doubled, and it confirmed that it still expects to deliver 50,000 vehicles in 2022.
But the company warned that higher costs and supply-chain issues will continue to squeeze its margins into 2023.
- Revenue: $435.4 million, versus $212.9 million in the third quarter of 2021
- Operating loss: $196.4 million, down from $292.9 million a year ago
Despite the operating loss, Polestar was able to report a net profit of $299.4 million, or 14 cents per share, thanks to an accounting credit related to the revaluation of future share payouts. (Because Polestar’s share price has fallen since it went public, it will have to pay out less than it had previously expected, hence the credit.)
Shares rose sharply after the report and ended Friday’s session up over 20%.
“I would like to reiterate: Polestar is a real car company,” CEO Thomas Ingenlath said during the earnings call. “We are putting cars on the road today and we are delivering on our ambitious growth plan.”
CFO Johan Malmqvist said that Polestar’s lower operating loss was helped by its efforts to reduce costs, specifically short-term reductions in advertising and marketing spending. On the other hand, foreign exchange headwinds exacerbated the loss, and those are expected to continue into next year.
“As our cars are produced in China, the majority of our costs are in renminbi, which has strengthened against European currencies, leading to a higher cost of sale,” Malmqvist said during the earnings call.
Malmqvist said that Polestar still expects to deliver 50,000 vehicles in 2022, generating about $2.4 billion in revenue for the full year, both in line with its prior guidance. Those numbers imply deliveries of about 19,600 vehicles in the fourth quarter, producing about $924 million in revenue – and those vehicles are already built and in transit to customers now, he said.
Polestar ended the third quarter with about $988 million in cash, and it has since secured a $1.6 billion credit line from its two main owners, Volvo Cars and Chinese automaker Geely. That’s enough to fund the company through 2023, Malmqvist said.