Polestar (PSNY) to cut 15 percent of global jobs amid slowing EV sales, weak market share

EV-centric brand Polestar just announced it will cut hundreds of jobs in its global workforce in order to lean down and reduce spending, as it looks to bolster sales of its upcoming Polestar 3 and 4 models without relying on additional funding from parents Geely and Volvo Cars.

It’s hard out here for startups, and yes, Polestar should still be considered a startup despite its backing from co-owner Volvo Cars and Chinese automotive conglomerate Geely. In seven years, Polestar has brought a limited-run PHEV called the 1 and the popular Polestar 2 PHEV, which saw a mid-life refresh entering its 2024 model year phase.

While the Polestar 2 and its variants have brought some excitement over the years, it’s the EV brand’s pipeline that has most EV enthusiasts high on it. The upcoming Polestar 3 has much riding on it as the automaker’s first US-built model and its first-ever SUV. It will be followed by the Polestar 4 crossover, a 5 sports sedan, and a Polestar 6 based on an original roadster concept.

2023 was a challenging year for the brand as it lowered its delivery targets but still ended up missing the mark by over 5,000 units, landing at 54,600 deliveries for the year. A critical factor in this miss was delays in the Polestar 3’s launch to market following software issues, so the automaker essentially had to rely on sales of the Polestar.

As a result, the Polestar name has not garnered the clout with consumers its executives would have hoped for at this point. So, to push forward beyond deliveries of the 3 and 4, Polestar has decided to lean down with some job cuts.

Polestar to cut 450 jobs around the globe

Per Reuters, Polestar’s job cuts should affect approximately 450 employees, citing “challenging market conditions” as the reasoning behind the decision to send about 15% of its global workforce to the unemployment lines.

Low demand for Polestar cars, and EVs in general, has been a thorn in the side of many OEMs entering 2024. Add inflation, supply chain hiccups, and a price war initiated by Tesla, and it’s a tough time to promote electrification – especially when a younger brand like Polestar is trying to stake its claim in the global market with one single model driving around on roads.

Polestar has already prefaced today’s job cuts by warning the public that it would need to cut costs and optimize to merely break even on cash flow by 2025. A spokesperson for Polestar echoed that sentiment and confirmed the layoffs in a statement on Friday:

As part of this business plan, we need to adjust the size of our business and operations. This involves reducing external spend and, regrettably, also our number of employees.

Looking ahead beyond today’s job cuts, Polestar 3 production is expected to begin production in China and South Carolina later this year, followed by the Polestar 4 in South Korea via contract manufacturing. Could this be another indication that Polestar once again goes private?