With so many electric vehicle (EV) startups shooting up out of China, Polestar‘s listing on the Nasdaq in 2022 had all the signs of success early on. Polestar’s share price peaked shortly after it listed at around $13, but since that day in 2022 it has fallen 90 per cent to barely $1.
In grim signs for the company, there are also now concerns around it as a going concern – a fundamental accounting assumption that a business or entity will continue its operations into the foreseeable future, typically at least 12 months, without the threat of bankruptcy or liquidation.
“Uncertainty related to the execution of management’s liquidity and funding plan indicates the existence of a material uncertainty that may cast significant doubt upon Polestar’s ability to continue as a going concern,” read part of Polestar’s unaudited financial statements.
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In layman’s terms, Polestar is on life support and there’s a three-year-old running around in the hospital room near the cord for the life support machine.
To paint a picture of how truly bad the situation is, you just need to spend a few minutes looking at a recent filing Polestar made.
Polestar’s H1 losses in 2024 amounted to $543.9 million. Fast-forward a year and those losses ballooned out to $1.193 billion. Furthermore, the company’s Gross Loss (the loss from selling cars before accounting for administrative or R&D expenses) expanded dramatically from $23.3m to $703.1m, driven by costs of sales that significantly outstripped revenue growth.
A primary indicator of financial distress is the relationship between current assets (cash and other assets expected to be converted to cash within a year) and current liabilities (debts due within a year). The report suggests current liabilities of $2.988 billion. This means Polestar’s short-term obligations due within the next year are nearly $3 billion more than its available short-term assets, creating a significant funding gap.
More than $700m of the problem comes thanks to the Polestar 3 large electric SUV. A substantial impairment loss of $739.3m comes thanks to “reduced short term sales forecasts”, “increases in production costs, including from tariffs on imported parts”, and “general pricing pressures on electric vehicles”.
So what does all this mean for Polestar moving forward? It doesn’t look good. Despite obtaining additional loan facilities earlier in 2025, to the tune of over $500m, the report states there is “material uncertainty as to whether Polestar will be able to comply with all its covenants in future periods”, and that “management cannot guarantee that Polestar Group will be successful in securing the funds necessary”.
The company’s own financial disclosures provide clear and substantial evidence supporting concerns about its ability to continue as a going concern. Polestar is facing a critical period in which its survival will be dependent on its ability to continually raise new capital and renegotiate terms with its lenders to fund its high cash burn and bridge a significant liquidity gap.
While management is actively securing new funds, the explicit statement that this financing is not guaranteed is the core of the “material uncertainty” that has been flagged.
What does this mean for existing and future customers? What protections are in place if Polestar does file for bankruptcy? Locally, consumers are protected by Australian Consumer Law and can then further pursue a dealer or importer for things like spare parts and warranty claims.
Fellow Geely brand, sister company Volvo, also shares some of its dealer facilities with Polestar.
Either way, it’s a grim position to be in and it’s worth thinking twice about buying a Polestar given how uncertain the company’s future is – according to its own management reports.