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U.S. and E.U. tariffs combined with pricing pressure overwhelmed any benefit from increased sales volumes at Polestar, which disclosed a first-quarter net loss of $383 million on Thursday — more than twice the $166 million it lost in the same period last year.
The company said its gross margin dropped to negative 3.2%, down from a positive 10.3% in the first quarter of 2025. Adjusted EBITDA also worsened, falling to negative $235 million from negative $96 million in the same period.
Total revenue was $633 million, about the same as last year. Revenue growth was limited by a shift toward the lower-priced Polestar 4 and away from the Polestar 3, as well as ongoing pricing pressure. These challenges were partly offset by higher sales volumes and favorable currency effects from the pound and euro. Carbon credit revenue also dropped to $17 million from $29 million a year ago.
Retail sales increased by 7% to 13,126 vehicles, up from 12,263 a year ago. This growth was driven by the company’s expanding retail network and higher demand for the Polestar 4. Polestar opened 19 new sales points during the quarter, bringing the total to 230.
The company said higher selling, general, and administrative expenses were due to more commissions from higher sales, some one-time personnel costs, and the timing of marketing activities. Research and development expenses stayed about the same.
CEO Michael Lohscheller offered no financial guidance for the year. "With implemented steps to improve our cost base being offset by more challenging market conditions, we are accelerating efforts to adjust our business model, become leaner and improve manufacturing efficiencies," he said in a statement.
At the end of the quarter, Polestar had $676 million in cash, down from $1.16 billion at the end of December 2025. The drop was mainly due to the adjusted EBITDA loss, negative working capital changes, and repaying financing facilities, partly balanced by new equity raised during the quarter.
During the quarter, the company raised $700 million in new equity from several financial institutions. This included $400 million from a special purpose vehicle linked to Sumitomo Mitsui Banking Corporation and Standard Chartered Bank (Hong Kong) Limited in February, and $300 million from a group of investors including Credit Agricole CIB in March. Geely Sweden Holdings and Volvo Cars also agreed to convert about $639 million in outstanding loans into equity, with Volvo Cars converting $274 million on March 31.
On the product side, Polestar said it plans four new models over the next three years, including a new Polestar 4 variant later in 2026, an all-new Polestar 2 in early 2027, and the compact Polestar 7 SUV in 2028.
Thursday morning premarket trading saw Polestar shares decline 4.3%, according to Reuters.