Let's hop in the DeLorean (an electric-converted one, naturally) and head way back in time to the distant past—the year 2021. Back then, interest rates were low, free money was cheap and every automaker looked at Tesla's sky-high valuations and said "How hard can it be?" That's the year Volvo parent company Geely Group began to go public with Polestar, which had turned from a performance label within Volvo to a standalone car brand four years prior. For a time, the future for Polestar seemed bright.
Except that it kind of hasn't been. Dogged for a long time by having just one EV in its lineup—a sedan in an SUV world—as well as slowing sales, production delays, trouble with tariffs, an unclear differentiation from Volvo and other problems, Polestar is replacing its founding CEO. Can the new guy, an industry veteran, turn things around for this troubled brand?
That kicks off today's Critical Materials, our morning roundup of must-read news about tech and mobility. Also on deck: Volkswagen gets even closer with Chinese partner Xpeng, and BYD brings the profits.
30%: Polestar's New Boss Has A Lot To Do
My colleague Iulian Dnistran broke down the surprise resignation of Polestar's founding CEO, Thomas Ingenlath, and in that story he also outlined some of the many problems facing that brand. Ingenlath was a designer by trade and brought us, among other things, the Polestar 1 and Polestar 2.
The new boss is Michael Lohscheller, a business guy through and through. He started his automotive career at what was then called DaimlerChrysler and had stints at Mitsubishi and Volkswagen before taking the top job at then-European General Motors subsidiary Opel. When Opel became part of Stellantis in 2021, he did what everybody at Stellantis seems to do and got the hell out.
Given his extensive background, I think he deserves a bit more credit than the CEO roles at his last two gigs: Vietnam's VinFast, where he lasted about six months, and then leading troubled hydrogen truck startup Nikola.
I think Polestar is a vastly more legitimate enterprise than either of those companies, especially with the backing of Geely, which seems very serious about global expansion. But Lohscheller has a lot to figure out. Bloomberg explains:
Backed by Chinese billionaire Li Shufu, Polestar has struggled with delays in rolling out new models, while competition has been especially intense in China, a market it targeted for growth. The EV manufacturer has lost about 90% of its value since spinning out of Volvo Car AB two years ago.
Ingenlath’s tenure has been marked by management upheaval, disappointing sales, and the threat of losing the company’s US stock-market listing after failing to produce financial reports on time. His departure follows a broader reshuffle in June, as former Volkswagen executive Winfried Vahland was tapped to replace chairman Hakan Samuelsson.
There are some bright spots for Polestar, of course. The Polestar 2 may be getting a bit long in the tooth but it remains one of our favorite EVs on sale. The U.S.-built Polestar 3 SUV should help the brand get mainstream success the 2 sedans could not deliver, and the Polestar 4 seems like a unique and compelling option in a field where EVs don't always stand out.
But it's still got costs to get under control, a long-term strategy to launch, a "we're not Volvo" brand problem to sort out and car production that's both scattered across the globe and still largely dependent on Volvo in many places. Lohscheller had better be up for the task.
60%: Volkswagen And Xpeng Grow Closer
You'll hear more news from us today about China's Xpeng. But among other things, the rapidly rising automaker has a lot to teach new partner Volkswagen, which has also struggled with the software and tech side of the EV transition.
More than that, VW didn't count on getting hammered as badly as it has been in China. Sales of all its brands in that all-important market are falling fast. So just as VW is turning to Rivian for electrical architecture help here, it's partnering with Xpeng for China's next-gen EVs.
And CNBC reports that this is not exactly a partnership of equals in terms of know-how:
Hundreds of Volkswagen staff are spending time at Xpeng as the German auto giant and Chinese startup work to create electric cars for China, Xpeng co-president Brian Gu told CNBC on Monday.
He also said the partnership will help Xpeng’s global ambitions.
Volkswagen in July 2023 announced a $700 million investment into Xpeng to jointly develop two electric cars for delivery in China in 2026. The vehicles will be based on the platform for Xpeng’s G9, a midsize electric crossover SUV.
The German company’s workers are spending more time at Xpeng’s offices than the startup’s are at Volkswagen’s, Gu said. They are learning about the startup’s technology.
[...] Gu emphasized the forthcoming vehicles will be “very different” from those that currently sold by Xpeng or Volkswagen. He said the cars would likely have “better range, charging, much smarter driving, more feature luxury technology, for the same price, potentially.”
China learned to make cars through joint ventures with Western and other Asian automakers. Clearly, the roles have reversed now that the EV revolution is underway.
90%: Here's How Well BYD Is Still Doing
Meanwhile, as countless other automakers slow their EV plans, BYD is still crushing it—even amid an economic downturn in its native China. And it's only just now starting its big expansions into Europe and Mexico; we've only seen the tip of that iceberg.
Here's another from Reuters on BYD's strong returns in Q2:
BYD's net profit hit 9.1 billion yuan ($1.3 billion) in the April-June quarter, up 32.8% from a year earlier and its fastest growth since end-2023, while revenue grew 25.9% to 176.2 billion yuan, it said in a stock exchange filing.
Sales of autos and related products accounted for 75.8% of BYD's overall revenue and their gross margin rose to 23.9% in the first half of 2024, up 3.3 percentage points from the same period last year.
Gross margin fell to 18.69% in the second quarter from 21.88% the first quarter, per Reuters' calculations based on its fiscal disclosure.
BYD has taken a significant lead in the Chinese electric and plug-in hybrid vehicle sector, leveraging its vertical integration strategy by using key components such as batteries made by the company.
And as the rest figure out how to make EVs more affordable, I will just add this:
"For vehicles priced (in China) under 150,000 yuan ($21,046), BYD holds absolute pricing power because, aside from glass and tires, it manufactures almost everything in-house," said Rosalie Chen, analyst at Third Bridge.
Over half of the cars sold in China are priced under $21,000.
That's why all the others had better get serious about this stuff soon.
100%: What Does Polestar Need To Turn Things Around?
If you were in Lohscheller's shoes today, how would you approach these challenges? What would you do to make Polestar a "leader in the premium electric vehicle market," as the company puts it?
And does Polestar have what it takes to go the distance as a standalone brand, or could we see it fold back into Volvo—or Zeekr?
Contact the author: patrick.george@insideevs.com
