Struggling Polestar encounters heightened Q2 losses due to tariff difficulties and a slowdown in the electric vehicle market

Polestar, the electric vehicle (EV) maker owned by Geely, has reported a net loss of $1.02 billion in Q2 2025, a significant increase from the $268 million loss in the same period last year. The net loss for the first half (H1) of the year stood at $1.19 billion, primarily due to a non-cash impairment expense.

Despite the financial losses, Polestar's quarterly revenue saw an uplift, with a 36.6% rise to $791 million. This led to a significant revenue boost, with a 56.5% increase to $1.42 billion in H1 2025.

The net loss is attributed to a $739 million non-cash impairment charge on the Polestar 3 sport utility vehicle, caused by higher US import tariffs and a slowdown in EV demand. The company is currently not explicitly reported to be investigating any international tariffs or policy changes related to its business operations or geographic strategy in the most recent sources available from 2025. Their focus appears to be on product launch and innovation rather than explicitly on tariff or policy evaluations.

Polestar's financial situation, however, seems to be improving in other areas. The company's cash position as of the end of June 2025 is $719 million. In June 2025, Polestar announced a $200 million equity investment from PSD Investment, overseen by Eric Li, Geely Holding Group's founder and chairman.

Polestar is seeking to fortify its collaboration with Volvo Cars, with Volvo Cars responsible for producing the Polestar 3 in South Carolina, US. Volvo Cars, however, recorded an impairment charge in Q2 for its ES90 and EX90 models, citing the same reasons of tariffs and delayed product launches.

In the first half of 2025, Polestar saw an increase in retail sales volumes, surging by 51.1%. This increase is due to a shift to an active selling model, an expanded retail network, and an updated range of models. Polestar maintains its target for up to 35% compound annual growth rate in retail sales volumes through 2025 to 2027.

Polestar's CEO, Michael Lohscheller, stated that the operational performance in the first half of 2025 reaffirms the company's focus on increasing commercial footprint, selling more cars, and managing costs and inventory. The company is also in the process of evaluating the repercussions of international tariffs, policy alterations, and the changing market landscape on its business operations and geographic strategy.

The gross margin was severely affected by the Q2 impairment expense, reporting at 49.4%. Despite this, Polestar is moving forward with plans to begin production of the Polestar 7 in Kosice, Slovakia, in July 2025, as announced in a memorandum of understanding with Volvo Cars.

In conclusion, while Polestar faced significant financial losses in Q2 2025, the company's revenue and retail sales volumes have seen impressive growth. Polestar is continuing to focus on expanding its commercial footprint, improving operational performance, and evaluating the impact of international tariffs and market changes on its business strategy.

Struggling Polestar encounters heightened Q2 losses due to tariff difficulties and a slowdown in the electric vehicle market