Polestar’s Losses Show the EV Squeeze Is Getting Real

Polestar’s record loss is not a one-off stumble. It is a snapshot of an EV industry stuck between ambition and reality. Demand is uneven, costs remain high, and geopolitical pressure is rising.

The result is a simple but uncomfortable truth. Scaling EVs is proving harder, slower, and less profitable than many expected.

Polestar reported its largest annual net loss since listing, with losses widening to $2.36 billion in 2025 from $2.05 billion the year before. More than $1 billion of that came from writedowns, largely tied to specific models facing weaker pricing and higher costs.

The headline looks brutal, but the underlying picture is more mixed. Revenue jumped roughly 50% to just over $3 billion, supported by sales of more than 60,000 vehicles as the company expanded its lineup and leaned on stronger demand in markets like the UK.

There were also some signs of progress. In the fourth quarter, losses narrowed to $799 million, and adjusted gross margins turned positive at 1.9%, helped by cost cuts, improved pricing, and additional carbon credit revenue.

Still, management is not sugarcoating the outlook. Chief executive Michael Lohscheller warned that conditions are likely to get tougher. The backdrop includes geopolitical tension, tariffs, and continued volatility in EV demand.

Polestar is pushing ahead with a turnaround strategy focused on launching new models, cutting costs, and shifting its geographic focus. Europe has become a relative bright spot, while the US and other markets remain more sluggish. The company continues to rely on financial support from parent Geely as it tries to stabilize the business.

Polestar’s numbers capture the core tension in the EV story right now. Growth is happening, but profitability is not following.

For years, the industry narrative was simple. Scale production, drive down costs, and margins will improve. That logic still holds in theory. In practice, it is running into friction from multiple directions at once.

Start with demand. EV adoption is still rising, but not evenly. Some markets remain strong, particularly in Europe where regulation and incentives are supportive. Others are slowing, either because subsidies are fading, infrastructure is lagging, or consumers are becoming more cautious about big-ticket purchases.

That uneven demand creates a problem. Automakers have built capacity for a world where EV growth is smooth and predictable. Instead, they are dealing with pockets of strength and pockets of weakness. That makes pricing harder and utilization less efficient, both of which hurt margins.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we’ll show you why it’s our #1 pick. Tap here.

Then there is competition. Chinese manufacturers are expanding aggressively into Europe, often with lower-cost models that put pressure on pricing across the market. That is forcing companies like Polestar to compete not just on technology and brand, but on price. In a capital-intensive industry, that is not a comfortable place to be.

On top of that sits policy risk. Tariffs, particularly from the US, are reshaping supply chains and raising costs. Polestar has already taken writedowns on models affected by higher duties on parts. That is a reminder that EV economics are not just about batteries and software. They are also about trade policy and geopolitics.

And then there is the macro backdrop. The Iran war and broader geopolitical tensions are adding another layer of uncertainty. Higher energy prices, supply chain disruptions, and weaker consumer confidence all feed into the same equation. Expensive products become harder to sell, just as costs become more volatile.

The result is what Polestar’s numbers show. Revenue can grow, volumes can rise, and losses can still widen. That is not because the strategy is fundamentally broken. It is because the path to profitability is longer and more fragile than expected.

There is also a capital story here. EV makers have relied heavily on external funding to support expansion. Polestar is no exception, leaning on Geely for financial support. That works while capital is available and confidence holds. It becomes more challenging if markets tighten or patience wears thin.

The next phase for Polestar, and the EV sector more broadly, is about proving that growth can translate into sustainable returns.

For Polestar, that means continuing to improve margins while scaling volume. The shift to positive gross margins in the fourth quarter is a start, but it needs to become consistent. Cost control, supply chain efficiency, and pricing discipline will be critical.

Geography will matter too. Europe looks like the near-term anchor, while the US remains more uncertain. How the company navigates tariffs and local demand conditions will shape its trajectory.

More broadly, investors will be watching for signs that the EV industry is moving past its most capital-intensive phase. That does not mean growth will stop. It means the focus will shift toward profitability, cash flow, and returns.

Polestar’s results suggest that transition is underway, but far from complete. The company is still in build mode, still reliant on external support, and still exposed to a volatile backdrop.

The EV story is not collapsing. It is maturing. And like most maturing industries, it is becoming less about vision and more about execution.

One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here.