Polestar Halts 2025 Financial Guidance Amid Tariff Turmoil and Trade War Fallout

Polestar, the Swedish electric vehicle (EV) manufacturer, has paused its financial guidance for 2025, citing “significant uncertainty” stemming from U.S. tariffs on Chinese-made goods and evolving government regulations. The decision underscores the growing challenges for global automakers caught in the crosshairs of the U.S.-China trade war, which has now escalated to a 145% tariff on Chinese imports—a historic high.

The Tariff Tsunami: How U.S. Trade Policy Is Upending Supply Chains

The U.S. tariffs on Chinese goods, which surged to 145% in April 2025, are the culmination of a years-long trade war. The levy applies to nearly all Chinese-manufactured products, including Polestar’s EVs, which are currently produced in China and South Korea. The tariffs, layered atop existing levies on EVs and components, have created a “financial and operational minefield” for companies reliant on Asian supply chains.

The tariffs’ impact is twofold:
1. Cost inflation: The 145% tariff could add hundreds—or even thousands—of dollars to the price of Polestar’s vehicles, squeezing margins.
2. Production relocation risks: Shifting manufacturing to the U.S. or Europe to avoid tariffs could expose Polestar to penalties under “rules of origin” laws, which require a minimum percentage of local content to qualify for lower tariffs.

The company’s CEO, Michael Lohscheller, emphasized that tariffs are forcing a “strategic recalibration,” including plans to produce the Polestar 7 in Europe and export the Polestar 4 from South Korea. Yet these moves come with their own risks, such as delays in securing new manufacturing partnerships and navigating regulatory hurdles.

How Does This Compare to Competitors?

While Tesla has diversified its supply chain and secured North American production hubs, Polestar’s reliance on Asian manufacturing leaves it more exposed. Analysts note that Tesla’s stock has held up better despite broader market volatility, reflecting investor confidence in its supply chain resilience.

The Financial Reporting Delay: A Red Flag or a Speed Bump?

Polestar also delayed its 2024 annual report (Form 20-F), pushing the deadline to May 14, 2025. This follows prior restatements due to accounting errors, raising concerns about internal controls and transparency. The delay is particularly notable given the company’s stated focus on “operational efficiency” and investor confidence.

The Silver Lining: Polestar’s Growth Strategy and Sustainability Push

Despite the headwinds, Polestar remains committed to its 30–35% annual sales growth target from 2025 to 2027, driven by its premium EV lineup. Key strategies include:
- Product mix shift: Focusing on higher-margin models like the Polestar 4 and upcoming Polestar 5 and 6.
- Cost-cutting initiatives: Streamlining operations to improve gross margins.
- Sustainability goals: Aiming to halve per-vehicle emissions by 2030 and achieve climate neutrality by 2040.

The company’s partnership with Volvo Cars and Geely also provides a manufacturing safety net, though these ties may not fully insulate it from tariff impacts.

Data-Driven Risks and Opportunities

• Tariff Impact on China’s Economy: Nomura estimates that 2.2% of China’s GDP and 9 million manufacturing jobs are directly exposed to U.S. tariffs. A prolonged trade war could further dampen global EV demand.
• Polestar’s Valuation: Analysts’ average target price of $1.45 for PSNY (up from $1.09 at the time of reporting) suggests cautious optimism, though the “Underperform” rating highlights skepticism about near-term execution.

Conclusion: Riding Out the Storm or Sinking Under the Weight?

Polestar’s pause in financial guidance is a pragmatic response to an unprecedented trade environment. The 145% tariff on Chinese goods—a record in modern trade history—has upended supply chain assumptions and cost structures. However, the company’s focus on premium models, cost discipline, and sustainability could position it to rebound once trade policies stabilize.

Crucially, Polestar’s sales growth targets (30–35% annually) remain ambitious but achievable if it can navigate production relocations and tariff penalties. The delayed financial report and past accounting issues, however, introduce operational uncertainties that could deter investors.

For now, the stock’s muted valuation reflects market skepticism. But if Polestar can execute its strategy amid the trade chaos—and tariffs eventually ease—the company could emerge as a winner in the premium EV market. The coming quarters will test whether its “cautious optimism” turns into tangible results.