Polestar Accelerates Toward Profitability: Can 2025 Deliver on Ambitious Growth?

Polestar, the Swedish electric vehicle (EV) manufacturer, has set an audacious path for 2025, aiming to nearly double its revenue and vehicle deliveries while narrowing its losses to near breakeven. The company’s 2024 performance laid the groundwork for these targets, with strong sales growth and operational improvements signaling progress toward its long-term goal of profitability by 2026. But can Polestar sustain this momentum amid intensifying competition and supply chain risks?

2024: A Year of Momentum

Polestar’s 2024 results marked a pivotal step forward. Revenue surged 54% year-over-year to $3.2 billion, driven by a 78% jump in vehicle deliveries to 44,300 units. The company’s flagship Polestar 3 and 4 SUVs, which debuted in late 2023, accounted for much of this growth, with their high margins helping to improve the EBIT margin to -12.5%, a significant narrowing from the -23.4% reported in 2023.

The shift toward larger, premium SUVs has been critical. These models not only command higher prices but also align with global EV demand trends, where SUVs now represent over 60% of all EV sales in key markets like Europe and the U.S.

2025: The Year of Scaling Up

Polestar’s 2025 guidance is bold but measurable. The company aims for revenue of $5.0–5.3 billion, a 56–66% increase over 2024, supported by deliveries of 75,000–80,000 vehicles—a 69–80% rise. To achieve this, Polestar is doubling down on three strategic pillars:

1. Market Expansion: Entering high-growth regions like India and the Middle East to diversify its customer base. These markets offer untapped potential, with India’s EV market expected to grow at a 23% CAGR through 2030, driven by government subsidies and urbanization.
2. Supply Chain Resilience: Partnering with Chinese battery manufacturer Zongshen to secure low-cost, high-quality battery cells—a critical component in EV production. This collaboration aims to reduce dependency on volatile global supply chains.
3. Cost Discipline: Prioritizing capital efficiency by focusing R&D and marketing spend on high-margin models like the Polestar 3 and 4, while avoiding overextension into less profitable segments.

The EBIT margin target of -5% to -3% underscores the focus on profitability. Reducing losses by nearly half from 2024’s level would position Polestar well for its 2026 breakeven goal.

Risks and Challenges

Polestar’s ambitions are not without hurdles. The EV market is becoming increasingly crowded, with established players like Tesla, Ford, and GM ramping up production, while Chinese rivals like NIO and Li Auto are expanding globally. Competing on price and features in saturated markets will require relentless innovation.

Supply chain risks remain a wildcard. Despite partnerships like Zongshen, disruptions in battery raw materials (e.g., lithium, cobalt) or geopolitical tensions could derail production timelines. Additionally, entering new markets like India requires navigating complex regulations and building local distribution networks—a costly and time-consuming process.

Conclusion: Polestar’s Path to Profitability

Polestar’s 2025 targets are aggressive but achievable if the company executes its strategy flawlessly. The Polestar 3 and 4 SUVs, with their premium pricing and strong demand, are already proving their worth. The company’s focus on high-margin segments and cost control could push it closer to breakeven.

However, success hinges on two critical factors:
1. Market Penetration: Can Polestar replicate its success in Europe and North America in emerging markets like India, where local competition is fierce?
2. Supply Chain Stability: Will partnerships like Zongshen mitigate risks, or will rising input costs squeeze margins?

For investors, Polestar represents a high-risk, high-reward bet. Its 2024 results and 2025 roadmap suggest the company is on track, but execution will determine whether it can outpace rivals and deliver on its profitability timeline. With a 56–66% revenue growth target and a narrowing loss trajectory, Polestar’s next 12 months will be a proving ground for its vision. Stay tuned.