Polestar posts loss, plans steps to offset tariffs on China-made EVs

FILE PHOTO: The Polestar 4 electric SUV is displayed at the New York International Auto Show Press Preview, in Manhattan, New York City, U.S., March 27, 2024. REUTERS/Brendan McDermid/File Photo

STOCKHOLM (Reuters) - Electric vehicle (EV) maker Polestar said it will have to take steps to offset hefty EU and U.S. import tariffs on its Chinese-made electric cars as it posted a first-quarter operating loss on Tuesday.

The Swedish-based company, controlled by China's Geely, currently makes all its EVs in China.

Its new model, the Polestar 3, will be made in the United States from the end of this summer and the Polestar 4 will be produced in South Korea starting in the second half of 2025.

Polestar has been working for some time to reduce its reliance on Chinese production.

Steps it plans to announce later this year could include material cost reductions across Polestar's supply chain or other actions, a spokesperson said, but added the plans do not include further job cuts.

In the meantime, Polestar faces provisional tariffs of 20% proposed by the European Commission on cars it imports into the European Union and duties of more than 100% in the United States.

Polestar told Reuters there would be no customer delays due to tariffs and that it was not possible to produce the Polestar 4 in any other location.

Like others it faces a worsening demand outlook for EV makers, where a price war started last year by rival Tesla has left many automakers struggling to sell cars they have already produced.

The company has a cash flow break-even target for 2025 which it risks not meeting due to the tariffs and price war.

On Tuesday it posted a first-quarter operating loss of $231.7 million while revenue plunged to $345.3 million from $543.4 million a year earlier.

In its quarterly report, the automaker said its results had been hit by both lower sales and higher discounts.

(Reporting by Marie Mannes; editing by Jason Neely)