Polestar’s Electric Dream: When Growth Isn’t Enough to Outrun Gravity
Polestar’s bold vision is etched across every curve of its vehicles—but the stock, down a stunning 50.5% over the past six months, tells a story of struggle beneath the surface polish. In the high-voltage theater of electric vehicles, raw growth alone no longer guarantees applause.
Faster, Louder, Deeper Red: The Paradox of Soaring Sales
At first glance, Polestar’s sales sheet glows: revenues surged 49% to $2.2 billion in the first nine months of 2025, and retail deliveries jumped 36% to over 44,000 cars. Yet, each sale seems to dig the hole deeper. The company’s net loss widened to $1.6 billion—a number swelled by a $739 million impairment, but also by an unyielding negative gross margin: -34.5% for the period, with even Q3 clocking in at -6%.
It’s a paradox: more cars, more revenue, but also more bleeding. When adjusted, the gross margin barely pokes above water at -1.8%. Wall Street has noticed: the stock plummeted 45.8% over three months and 44.2% over the past year, as investors tire of “future profits” that never quite arrive.
Tariffs and Tides: The Cost of a World in Flux
2025 has not been kind to global supply chains. Geopolitical tensions and protectionist tariffs have become the new normal, especially in the EV industry. Chinese producers—Polestar’s production backbone—face heavy tariffs in both the U.S. and Europe, squeezing already razor-thin margins and forcing price hikes or profit sacrifices. Even with expanded retail networks and launches like the highly anticipated Polestar 5, the company’s cost structure remains hostage to international maneuvering.
The Debt Spiral: Financing Tomorrow, Worrying Today
Polestar’s drive for scale is fueled by debt—and lots of it. As of late 2025, debt-to-equity stands at 2.87, and total debt has ballooned to $4.4 billion. A recent $800 million refinancing patched up near-term liquidity, but the cash burn remains relentless: free cash flow to sales at -90.9% and free cash flow to EBITDA at 184% (2024 data). With less than $1 billion in cash on hand at the end of Q3, the company is in a perpetual hunt for fresh equity and faces the ignominy of a planned reverse stock split to maintain its Nasdaq listing after shares dipped below $1.
Rivals in the Rear-View—And the Headlights
Polestar’s woes are not suffered in isolation. The global EV market is a pit lane of giants and disruptors—Tesla, BYD, NIO, Rivian, legacy automakers with electric ambitions—each jockeying for pole position. Intense price competition, consumer demand for ever-better tech, and unpredictable policy shifts have made profitability a moving target. Polestar’s net margin of -132.2% and ROE of -228.42% (2023) look especially dire compared to peers, despite a worldwide surge in EV adoption.
The Mirage of Momentum: Can Innovation Outpace the Numbers?
There’s no denying Polestar’s aesthetic and technological swagger. Its commitment to sustainability is genuine; its new models command attention; its global footprint—now in 28 markets—impresses. Yet in the capital markets arena, those virtues collide with hard arithmetic. The crowd wants proof that selling more cars won’t just mean losing more money. Until margins flip and the debt treadmill slows, the narrative remains treacherous.
When the Windshield Freezes Over
Polestar’s journey is a masterclass in the dangers of scaling fast in a sector where costs are unpredictable and capital is no longer free. For all its ambition, the company is racing not just competitors, but the limits of its own balance sheet. The next act—restructuring costs, improving margins, and navigating tariff headwinds—will determine if this electric dream can finally break free from gravity’s pull.