Polestar reports weak half-year results and lowers forecasts

Polestar reported mixed financial results for the first half of 2026. While the Swedish-Chinese electric vehicle manufacturer managed to see a slight increase in sales and significantly reduce its operating losses, restructuring efforts in its U.S. operations led to additional costs.

In the first half of 2026, Polestar saw a slight increase in global retail sales to 30,423 vehicles. This represents an increase of 134 vehicles or 0.4 percent compared to the previous year. Nevertheless, Polestar notes positive developments in sales, citing the ongoing shift toward an active sales model, the expansion of retail locations, an attractive range of models, and the growing share of Polestar 4 as progress.

However, Polestar’s total revenue decreased by about 4 percent year-on-year to $1.36 billion. The main factors behind this were price pressure, costs associated with residual value guarantees, and lower income from selling CO2 credits to other manufacturers.

Polestar with Lower Losses

Despite declining sales, the operating result improved significantly. Operating losses fell by 43 percent in the first half of the year to $629 million. In the same period last year, high depreciation costs had weighed heavily on results. However, net losses only decreased by 29 percent to $842 million.

The reason net losses were much higher than operating losses was mainly due to the severe headwinds facing Polestar in the U.S. market. As is well known, the U.S. Department of Commerce decided not to grant the company an exemption under the so-called Connected Vehicle Rule. This regulation prohibits the sale of connected vehicles with Chinese technology in the U.S. starting from model year 2027.

This led to extensive restructuring measures that added an additional $211 million to the first-half results. Moreover, a Polestar dealer in New Jersey has now sued the company, viewing the Connected Vehicle Rule as a convenient pretext for withdrawing from the U.S. market.

Volvo’s sister company got an exemption

The lawsuit is backed by Polestar’s sister company, Volvo, which also belongs to the Chinese Geely Group and has received an exemption. According to U.S. Senator Bernie Moreno, Volvo met a lengthy list of requirements to obtain this exemption, whereas Polestar did not take that path.

In light of intense competition and regulatory pressures in the United States, management has now adjusted its annual forecast. For the full year 2026, Polestar expects sales growth in the low to mid-single digit range. This reflects both business performance in the first half of 2026 and the upcoming model transition, according to the company. The current Polestar 2 is nearing the end of its lifecycle, while the new SUV version of the Polestar 4 is set to launch in the fourth quarter of 2026.

Previously, the company had projected low double-digit sales growth. The revised forecast was met with negative reactions on the U.S. technology stock market Nasdaq, causing Polestar’s share price to drop by 30 percent and reach a historic low.