Polestar reported its first quarter earnings results this week, posting an 84% rise to $608 million in revenue and a gross margin of 6.8%.
Answering questions from analysts at the conference call that followed the results, CEO Michael Lohscheller stated that the tariff impact on imported vehicles and auto parts would be minimal, as the company’s “U.S. business is around 11%.”
Bank of America analyst John Babcock asked whether it would be more strategic for Polestar to shift its supplier base toward U.S.-based suppliers, or instead to adjust its sales strategy by focusing more on other markets.
“If you have 75% of your volume in Europe and see strong growth, […]” the chief executive replied, “then of course the focus of our work is on Europe.”
Lohscheller highlighted that the company did “exceptionally well” in the UK — where sales grew 184.7% in the first quarter — and that it’s expanding “into markets like France” this summer — after being banned due to an issue with its logo in 2022. Â
“Our brand is well established, we have now new cars which are being well received, so Europe is working well,” the executive added, “but of course the U.S. is a very interesting growth market for us.”
The company also produces its Polestar 3 model in the U.S., contrary to the Polestar 2 and 4, which are only manufactured in China. Production of the Polestar 4 is planned to start in Busan, South Korea, in the second half of the year.
“I think it’s fair to say that we are relatively well positioned in the U.S. because 100% of our volume is localized in the Volvo plant in Charleston, South Carolina,” the CEO said.
Last month, the brand stopped selling the Polestar 2 model from its US website in reaction to the recently announced US tariffs.
Polestar’s North America chief, Anders Gustafsson, announced last week his exit after spending less than a year in the role.
Questioned by Bernstein’s Daniel Roeska about what portion of the vehicle production in the U.S. factory consists of non-USMCA (U.S.-Mexico-Canada free trade agreement) parts, Lohscheller stated that “the main component is the battery.”
Andres Sheppard, a Cantor Fitzgerald analyst who had previously mentioned that Polestar could offset some of the tariff pressure through its facility in South Carolina, recalled that its “production capacity is about 150,000” vehicles.
Sheppard estimated that Polestar‘s production mix will be “roughly” 50,000, with the rest being Volvo vehicles.
During the call, the analyst asked whether that production capacity would be used to meet U.S. demand, or if the company planned to mitigate the impact of tariffs by shifting its focus to Europe and other international markets instead.
To Michael Lohscheller, the “U.S. is a growth market,” with “dealers see[ing] a lot of momentum.”
“Obviously still on a small scale, but we have the facilities, we have enough capacity,” the chief executive said, adding that Polestar 4 will be available in the market in “the second half” or “by the end of this year.”
Redburn analyst Tobias Beith wondered if the South Carolina plant’s production capacity for Volvo and Polestar was something fixed or volatile: “Is it fair to assume that there is a world where Volvo says ‘hey, actually I would prefer to use the capacity in South Carolina to produce more EX90s, and therefore limit Polestar 3s’ volumes in that country?”
“At the moment, we have a situation where I think it’s fair to say we have sufficient capacity, especially in the U.S.,” the CEO answered, “so we actually don’t have that discussion which you referred to.”
Polestar sold 1,611 vehicles in the U.S. between January and March, down 37% year over year from 2,210 units, according to Motor Intelligence. Global sales jumped 76% to “an estimated 12,304” vehicles.
Michael Lohscheller concluded that “there is no change of strategy: Europe is our home market, this is where we do well, and the U.S. is an important growth market for us now and in the future.”
