Electric vehicle companies face a challenging path to success.
First, they must convince consumers to pay prices that are generally higher than comparable models using a traditional gas engine. They also have to get over any concerns people have over electric vehicle (EV) technology, as well as worries about their ability to charge their cars.
That’s a valid concern. As the owner of a BMW i3, a small EV that has a 2-gallon gas “range extender,” I find planning where to charge has become a large part of my driving life.
My car only gets about 120 miles of EV battery charge and then another 80 miles from the gas backup. I can limp forward by continually filling the gas tank, but I try to find charging locations, which is challenging when your car cannot use Tesla (TSLA) chargers.
These are meaningful hurdles that have driven multiple big-name EV companies into bankruptcy. Now, another major player, Polestar, has issued a “going concern” warning, telling investors and consumers that it has very real doubts about its chances for survival.
Image source: Getty Images
EV maker Polestar issues a “going concern” warning
Polestar tried to paint a positive picture in its first-quarter earnings report. CEO Michael Lohscheller did his best to show the company in a positive light.
“We continue to make great progress, transforming our commercial operations and taking steps to reduce our cost base. We are selling more cars, at improved margins, resulting in revenue growth of 84%, a gross margin that is now positive, at 7%, and a narrowing net loss. We have a strong and growing line-up of attractive cars, with an expanding network of retail partners across key markets. The geopolitical environment and market conditions are challenging, but we are on the right track and doing the right things.”
Positive numbers shared by Polestar
- Growing share of higher margin models in sales mix and continuing cost reduction measures began to drive financial and operational performance improvement.
- Gross margin improved by 15 points to 7% versus Q1 2024.
- Net loss declined by 31%; an Adjusted EBITDA loss improved 46% year-over-year.
- Over $900 million worth of financing facilities were secured or renewed in Q1 2025.
- Cash position was $772 million as of end Q1 2025.
But, while companies can shade their results however they want, in the end, they have to disclose any real problems that might come up.
“Management assessed Polestar Group’s ability to continue as a going concern and evaluated whether there are certain events or conditions, considered in the aggregate, that may cast significant doubt about Polestar’s ability to continue as a going concern. As a result of this assessment, management identified a material uncertainty that casts doubt on Polestar Group’s ability to obtain sufficient financing to support its cash flow needs and ensure on-going compliance with its debt covenants.”
Source: Polestar
Polestar’s improving sales numbers
- Retail sales totaled an estimated 12,304 cars, up 76.4% YoY, supported by a growing uptake of newer models.
- Revenue increased 84.2% YoY, driven predominantly by higher volumes and favorable shift in the product mix.
These encouraging signs do not change the fact that the company needs new financing in order to avoid a bankruptcy filing.
Polestar needs a lifeline to avoid bankruptcy
Polestar stock plummeted on the news, but that’s relative because it has been trading below $1 for the past 52 weeks. The company’s low stock price, however, does make it harder to raise money.
“We think their big problem is going to be EV demand in the absence of incentives combined with liquidity,” CFRA Research Senior Equity Analyst Garrett Nelson told Reuters.
During the second-quarter earnings call, Lohscheller was terse with his comments on the company’s financial situation.
“Following ongoing discussion, Polestar agreed to amended covenants with club loan facility banks and quarterly and annual testing for the remainder of 2025. Regarding its debt level, Polestar remained compliant with its loan covenants,” he shared.
Polestar’s financial health score is rated as weak, according to InvestingPro data. The company “has a total debt burden of $5.1 billion and concerning cash burn rates,” it shared.
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Analysts at Cantor Fitzgerald highlighted the company’s need for additional capital, anticipating that Polestar will require in excess of $2 billion through 2028, Investing.com reported.
The company’s own auditor has also shared its concerns.
“Polestar Automotive Holding UK PLC filed its 20-F on May 09, 2025 for the period ending Dec. 31, 2024. In this report, its auditor, Deloitte & Touche LLP, gave an unqualified opinion expressing doubt that the company can continue as a going concern,” MarketScreener.com posted.
Timeline of EV companies that have filed for bankruptcy
2022
- Electric Last Mile Solutions (U.S.): Chapter 7 liquidation
2023
- Proterra (U.S.): Chapter 11, assets sold
- Lordstown Motors (U.S.): Chapter 11, restructured as Nu Ride
- WM Motor/Weltmeister (China): Declared bankruptcy
2024
- Arrival (UK): Bankrupt, assets sold
- Fisker (U.S.): Chapter 11
- Lion Electric (Canada): Creditor protection/Chapter 15
- Ideanomics (U.S.): Chapter 11
2025
- Canoo (U.S.): Chapter 7, shut down
- Nikola (U.S.): Chapter 11
- Northvolt Batteries NA (Sweden/Canada): Insolvent, Chapter 11
- Bollinger (U.S.): In receivership (not yet bankrupt)
Related: It’s not just Tesla; another EV giant takes a big tumble
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