Polestar Automotive (NASDAQ:PSNY) has taken steps to secure additional capital, given the challenges it faces in managing a financially stressed balance sheet and ongoing cash consumption.
As per a recent filing with the Securities and Exchange Commission, the company is considering raising up to $1 billion. This plan will allow Polestar to sell different types of shares slowly over an extended period.
Polestar, owned by Volvo Car AB (ST:VOLCARb) and Chinese billionaire Li Shufu's private investment firm, is facing challenges in expanding its market presence. These challenges stem from software delays and stiff competition from Chinese manufacturers offering electric vehicles at more affordable prices.
In the second quarter, the company incurred a loss of $304 million. In August, it reported having enough funding to operate until the end of the year and is actively exploring options for the period beyond that. As a result of concerns about meeting delivery targets, the company's shares have seen a 45% decrease in value this year.
Polestar has reduced its annual delivery goal to a maximum of 70,000 units, down from the previous target of 80,000. The company currently manufactures vehicles in China and intends to expand production to a shared facility with Volvo Car in South Carolina.
In November of the previous year, Polestar secured $1.6 billion in funding commitments from its primary shareholders, Volvo Car and Li's PSD Investment Ltd.
A company spokesperson explained that the recent SEC filing is a routine step taken to provide Polestar with the flexibility to raise extra capital.
Shares of PSNY are down 8.62% in premarket trading Wednesday morning.