The new power car company, Jixing Motors (hereinafter referred to as "Jixing"), backed by Geely and Volvo, has fallen into trouble.
In recent years, the competition in the domestic new energy vehicle market has gradually intensified, with prices, intelligent driving, and configuration being common. As the domestic market share gradually saturates, overseas markets have become the second driving force for new forces. Of course, there are also car companies with completely opposite strategies, such as Polestar.
Due to its headquarters located in Gothenburg, Sweden, and its overseas reputation far exceeding that of the domestic market, Polestar has chosen to develop from the outside in. Shen Ziyu, Chairman and CEO of Polestar Technology, once said, "The Chinese market is too competitive, and we don't have much advantage in comparing prices and parameters with others. If we can't compete, we won't be able to compete."
But the drawbacks of focusing on overseas markets are emerging.
Recently, due to the failure to timely release its 2023 financial report, Polestar received a delisting notice. Coupled with previous problems such as increased losses, difficulty in increasing sales, and layoffs, how long can the "besieged" Polestar last?
Photo taken by Wu Di at Polar Star Store
Received a delisting warning
The delayed release of performance has led to Polestar receiving a delisting warning from the New York Stock Exchange recently.
On May 17th, the official website of Polestar announced that due to the failure to submit the annual report for the fiscal year ending December 31, 2023 in a timely manner, the company has received a notice from the NASDAQ Stock Exchange in New York stating that Polestar Automobile does not meet the periodic financial report submission requirements for continuous listing as stipulated in NASDAQ Listing Rules 5250 (c) (1).
According to the listing rules of NASDAQ, from the date of notification, Polar Star Motors will have 60 days to submit a compliance plan to NASDAQ. If NASDAQ accepts the plan, Polestar may receive an additional period of up to 180 days from the due date of the annual financial report, which is until November 11, 2024, to re qualify for continuous listing.
If Polestar fails to restore compliance within the specified time, its stock will be delisted from NASDAQ.
According to the company's official website, efforts are being made to submit the company's annual report as soon as feasible, and to disclose the preliminary unaudited financial and operational results for the first quarter of 2024. Regarding this, a reporter from the International Financial News has sought confirmation from the Polestar side and has not received a response as of the time of publication.
Jiang Han, a senior researcher at Pangu Think Tank, told reporters that if a company fails to submit its financial report within the specified time, the delisting of its stocks will result in huge losses for investors, further reducing their trust in the company.
Loss of first mover advantage
In 2017, the high-performance department originally under Volvo Cars announced its independent development, and the Polestar brand was established in response. At that time, Volvo had already been acquired by Geely, and both sides became the "backers" of Polestar.
Unfortunately, the empowerment of the two major brands did not make Polestar take off, but rather eroded its first mover advantage due to longer new product launch cycles, delivery delays, and other reasons.
In September 2018, Polestar 1, the first car under Polestar, was launched at a price of 1.45 million yuan. It is positioned as a high-end product and cannot be sold in large quantities. Three years later, the second new car, Polestar 2, was only delayed in meeting consumers. Although it was positioned as a Volkswagen, at that time, Ideal, Xiaopeng, and NIO had already started large-scale deliveries, and the model's price was not inferior to Polestar 2. At the same time, the delivery volume of the first tier gradually increased, and the first mover advantage of Polestar had been lost.
For this reason, since last year, Polestar has consciously accelerated its product launch pace. The Polestar 3, priced at 698000 yuan, and the Polestar 4, priced at 299800 yuan, have been launched successively. The former is still positioned as niche, and to ensure the luxury nature of the brand, the latter has become another popular model after the Polestar 2, mainly facing the Chinese market.
But there has been no significant improvement, and the problem of "delay" in the delivery of Polestar still needs to be resolved. According to calculations, Polestar 1 took 3 years from its debut to delivery, which was delayed by more than half a year from the original schedule; The delivery of Polestar 2 only started one year after its launch; The Polestar 3 was originally planned to start its first delivery in the fourth quarter of last year, but due to Volvo Cars requiring further software development and testing for pure electric platforms, its production delivery is still waiting; The newly launched Polestar 4 was officially launched in November last year and began delivery in December.
Of course, this is only part of the reason that is dragging down the growth of Polestar. Perhaps the key is the loss of the Chinese market in the new energy era.
Chinese market failure
Industry insiders once said, "Those who win the Chinese automotive market will win the world." This statement is even more evident after the new energy wave swept across the world.
However, Polestar has not focused on the Chinese market. Looking back at the first three years, Polestar's sales have seen a significant increase, but most of its contributions come from abroad. Domestic sales have not improved, and even the proportion of sales is being compressed.
According to data, the global sales of Polestar in 2021 and 2022 were 29000 and 51500 vehicles respectively, with only 2048 and 1717 vehicles sold in China, accounting for 7% and 3% of the global total.
In the view of Polestar, consumers in overseas markets are more in line with Polestar. Shen Ziyu introduced that due to the high emphasis on safety issues in the European market, Polestar has inherited Volvo's safety. At the same time, European labor costs are high, and people are more accustomed to buying their own cars. Polestar has gained recognition from some European consumers, which has become one of the important factors for Polestar to choose to focus its development on overseas markets such as Europe.
He also acknowledges that in China, Polestar can be considered as getting up early and catching up late, which is a fact.
A reporter from the International Financial News visited several Polestar stores in Shanghai, and even during the peak flow of people after work on Friday, the Polestar stores were still deserted. Zhang Kang (pseudonym), a store salesperson in Jing'an District, told reporters, "Few people come directly to see cars. The number of Polestars in China is indeed small, but they are very popular abroad." From his words, the reporter learned that currently, Polestar's main export model to China is the Polestar 4, Polestar 2 is currently out of stock domestically and needs to be sourced from abroad. At the same time, Polestar is accelerating its investment in the Chinese market.
As stated, Jixing is currently interested in expanding its presence in the Chinese market, whether it is factory construction, headquarters project settlement, or sales channel expansion. Shen Ziyu once said, "We have a lot of lessons to learn in the Chinese market."
Being demoted as "worthless"
Affected by sales, the financial data of Jixing in recent years has also been unsatisfactory.
In 2021, 2022, and the first three quarters of 2023, Polestar's cumulative revenue was 5.643 billion US dollars, with a cumulative loss of 1.941 billion US dollars. In the first three quarters of 2023, its gross profit was $21.2 million, a decrease of approximately 63% from the same period last year of $57.5 million.
This means that Polestar's self hematopoietic ability is getting worse and worse, and it relies on Volvo and Geely for long-term blood transfusions. If there is no new capital injection, Polestar will face a survival crisis.
Faced with Polestar's declining performance year by year, the capital market has reacted most directly. Since its listing in June 2022, the company's stock price has dropped from $13 per share to $0.84 per share in the past two years, and its market value has shrunk from $26.595 billion on the first day of listing to $1.79 billion, evaporating over $24 billion.
Trouble never comes alone. According to Bloomberg, at the beginning of this year, Polestar was bearish by SEB, one of the largest financial conglomerates in Northern Europe and the main advisor to Volvo's IPO. The brand valuation of Polestar was lowered from 18 billion kroner to 0 kroner, which means that the current Polestar is "worthless". Its stock analysts believe that "Polestar has become a drag".
Even though Polestar has stated that the company will achieve profitability in 2025, SEB confirms that this will be completely unattainable. SEB analysts say that since its listing, Polestar has been seeking new capital injections from its main supporters Volvo Cars and Geely Group to achieve its goal of doubling production in the next two years. However, due to software delays and intensified competition in the Chinese market, it is difficult for Jixing to capture market share in the current market.
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