Polestar’s Strategic Pivot in the Premium EV Market: Assessing Investment Potential Amid Geely’s Restructuring

The premium electric vehicle (EV) market is witnessing a seismic shift as automakers recalibrate strategies to navigate supply chain disruptions, regulatory pressures, and intensifying competition. Polestar, the Swedish EV brand under Geely’s umbrella, is at the forefront of this transformation. With a bold 2025 strategic pivot aimed at achieving profitability and reinforcing its brand identity, Polestar’s journey under Geely’s restructuring efforts presents both risks and opportunities for investors.

Financial Resilience and Strategic Funding

Polestar’s first-half 2025 financial performance underscores its resilience. Revenue surged 56% year-on-year to $1.4 billion, while retail sales grew by 51%, driven by an expanded retail network and a shift to an active selling model [1]. This growth is underpinned by a robust cash position of $719 million as of June 30, 2025, bolstered by $200 million in new equity funding [2]. Geely’s continued financial support, including secured financing facilities exceeding $900 million in early 2025, further stabilizes Polestar’s operations during its restructuring phase [3].

Strategic Shifts: Localized Production and Product Innovation

A cornerstone of Polestar’s 2025 strategy is localized production to mitigate supply chain risks and reduce tariffs. The Polestar 7, a premium compact SUV, will be manufactured in Europe, aligning with EU regulatory demands and consumer preferences for locally produced vehicles [1]. Similarly, the Polestar 4 will be produced in South Korea to avoid U.S. tariffs on Chinese-made EVs [4]. These moves reflect a broader trend among Geely-owned brands to decentralize manufacturing, as highlighted by Volvo’s CEO Hakan Samuelsson, who emphasized local production as a key strategy to counter Trump-era tariffs [5].

Product innovation remains central to Polestar’s premium positioning. The company plans to expand its lineup to five models, including the Polestar 5 GT and Polestar 7, with a direct successor to the Polestar 2 in development for the late 2020s [3]. This expansion aims to capture growing demand for premium EVs while competing with Tesla and BYD. Geely’s collaboration with Polestar in R&D and shared manufacturing infrastructure further accelerates innovation, ensuring access to cutting-edge technologies and cost efficiencies [1].

Geely’s Restructuring: Leadership, Synergies, and Brand Positioning

Geely’s strategic realignment of its European operations is reshaping Polestar’s trajectory. The appointment of Lone Fonss Schroder as chair of Geely Sweden Holding—replacing founder Eric Li—signals a focus on streamlining operations and reducing internal competition between brands like Volvo and Polestar [5]. Polestar’s leadership has also undergone significant changes, with new executives appointed in China and North America to address declining sales in key markets [3].

Geely’s “Smart Geely 2025” strategy, emphasizing modular development and smart technologies, aligns with Polestar’s goals of reducing costs and improving efficiency [5]. By leveraging Geely’s global infrastructure, Polestar is expanding its retail footprint, including a 75% increase in retail spaces by 2026 and entering France in 2025 [3]. These efforts are critical to achieving Polestar’s target of 30-35% compound annual retail sales growth from 2025 to 2027 and positive adjusted EBITDA in 2025 [2].

Challenges and Opportunities

Despite its strategic momentum, Polestar faces headwinds. Its exit from China, with just 69 units sold in H1 2025, highlights the challenges of competing in a saturated market dominated by BYD and Tesla [3]. However, the brand’s pivot to Europe and North America—where demand for premium EVs is surging—offers growth potential. Polestar’s Q1 2025 gross margin of 7%, a significant improvement from previous quarters, suggests progress in cost management [3].

Investment Potential: A Calculated Bet

For investors, Polestar’s 2025 strategy represents a calculated bet on premium EV demand and Geely’s financial backing. The company’s focus on localized production, product diversification, and operational efficiency positions it to capitalize on market gaps. However, risks remain, including reliance on Geely’s funding and the need to sustain profitability beyond 2025.

Conclusion

Polestar’s strategic pivot under Geely’s restructuring efforts reflects a clear-eyed approach to navigating the premium EV market’s complexities. While challenges persist, the brand’s financial resilience, product innovation, and alignment with Geely’s global strategy make it a compelling, albeit high-risk, investment. As the EV landscape evolves, Polestar’s ability to execute its 2025 roadmap will be pivotal in determining its long-term viability.

Source:
[1] Polestar reports revenue growth of 56% in the first half of 2025 [https://investors.polestar.com/news-releases/news-release-details/polestar-reports-revenue-growth-56-first-half-2025/]
[2] Polestar targets profitability in 2025; Polestar 7 will be a premium compact SUV [https://investors.polestar.com/news-releases/news-release-details/polestar-targets-profitability-2025-polestar-7-will-be-premium/]
[3] Polestar reports Q1 2025 revenue growth of 84% and significant gross margin improvement [https://investors.polestar.com/news-releases/news-release-details/polestar-reports-q1-2025-revenue-growth-84-and-significant-gross/]
[4] Polestar responds to exit rumours amid restructuring in China [https://www.reddit.com/r/electricvehicles/comments/1j22oxe/polestar_responds_to_exit_rumours_amid/]
[5] Troubled by Trump's tariffs, Volvo Cars' new CEO turns to Chinese owner Geely [https://www.reuters.com/business/autos-transportation/troubled-by-trumps-tariffs-volvo-cars-new-ceo-turns-chinese-owner-geely-2025-04-30/]