Tobias Beith

Tobias Beith inquired about the impact of the bilateral trade agreement between the EU and the U.S. on Polestar's unit profits, particularly for the Polestar 3, and how the business plan might adapt. He also asked about the opportunity to increase profits on Polestar 3s exported to Europe and the effective interest rate on the renewed debt portfolio.

Answer

CEO Michael Lohscheller discussed the U.S. setup, noting local production in Charleston and parts from Mexico still face duties, but highlighted the Polestar 4 from South Korea to the U.S. benefits from lower duties. He acknowledged the opportunity for Polestar 3 exports to Europe but noted the challenges of immediate changes due to tooling investments, confirming it's being explored. CFO Jean-François Mady stated that most interest rates are floating and based on references, with no significant change in the new effective debt rate compared to the previous one.

Tobias Beith asked about the impact of the bilateral trade agreement between the EU and the U.S. on Polestar's unit profits, particularly for the Polestar 3, and how the business plan might adapt. He also inquired about the effective interest rate on Polestar's renewed debt portfolio and if it is mostly floating.

Answer

CEO Michael Lohscheller discussed the U.S. setup, including local production in Charleston and Polestar 4 imports from South Korea (lower duties), which he sees as a good basis. He acknowledged the opportunity to earn more profits on Polestar 3s exported to Europe, noting it's being explored. CFO Jean-François Mady confirmed that most of Polestar's interest rates are floating, based on references, and stated there was no significant change to the effective debt rate compared to the previous period.

Tobias Beith questioned the specifics of contract manufacturing agreements with Volvo and Geely, including protections against capacity reallocation. He also asked how management plans to navigate with an impaired equity value and requested the income generated from regulatory credits in Q1.

Answer

CEO Michael Lohscheller stated that manufacturing agreements are flexible and that capacity is currently sufficient, making reallocation a non-issue. He emphasized a strategy of focusing on European strengths to navigate market challenges. CFO Jean-François Mady declined to disclose Q1 regulatory credit income but reaffirmed confidence in reaching the full-year 2025 target of a '3-digit million U.S. dollar' amount.

Tobias Beith of Redburn Atlantic asked if the core vehicle business is expected to be self-funding without regulatory credits, whether platform consolidation could trigger impairments, and for a Q4 retail volume split by model.

Answer

CEO Michael Lohscheller stated that the automotive business and CO2 credit monetization are separate workstreams, with a clear goal for the car business to be profitable on its own. He assured that the gradual platform harmonization would not cause financial impairments on existing assets. While declining to give specific Q4 volumes, he noted that Polestar 3 and 4 represented 56% of Q4 order intake and are expected to be over 60-65% of the mix going forward.

Tobias Beith asked for details on the notable sequential reduction in cost of goods sold (COGS) per unit, an explanation for the disconnect between operating income and free cash flow, and whether the Polestar 3 and 4 models are considered sold out for 2024 in Europe and the U.S.

Answer

CFO Per Ansgar attributed the COGS improvement to raw material cost reductions, particularly for batteries, and collaborative negotiation efforts with Volvo and Geely. He confirmed the significant free cash flow improvement was primarily driven by a roughly $300 million reduction in inventory. Regarding vehicle availability, Ansgar explained that the Polestar 4 has not yet launched in the U.S., while Polestar 3 order books are expected to grow as test drives ramp up, indicating they are not sold out.

Tobias Beith of Redburn Atlantic inquired about the composition of Q2 sales volumes, specifically the number of Polestar 4 units sold. He also asked for an explanation of the negative gross margin in Q1 despite Polestar 4 sales, the current demand versus supply dynamic for the new Polestar 3 and 4 models, the financial impacts of shifting to a non-genuine agency model in Europe, and the flexibility of vehicle purchase agreements with Volvo and Geely.

Answer

CFO Per Ansgar clarified that Q2 sales were almost entirely Polestar 2 vehicles (approx. 200 Polestar 4s) and that complex revenue recognition rules for the China JV impacted Q1's Polestar 4 margins, which should normalize later. CEO Thomas Ingenlath described a careful ramp-up for Polestar 3 and 4 deliveries to serve the existing order book and convert 40,000 hand-raisers. Per Ansgar added that the new retail model is expected to be net positive for margins and working capital, and that manufacturing purchase agreements have flexible terms.

Tobias Beith of Redburn Atlantic sought clarification on the magnet supply constraint's impact given record Q2 output, requested a detailed timeline for the Atlas powertrain and midsize platform, and asked for a breakdown of inventory write-downs between tariffs and the Gravity production ramp.

Answer

Interim CEO Marc Winterhoff clarified the magnet issue was specific to a certain trim and has been resolved, and confirmed the midsize platform remains on track for a late 2026 production start. CFO Taoufiq Boussaid detailed that the net tariff impact was approximately $55 million in Q2, which included an inventory impairment that is not expected to have a similar impact in subsequent quarters.

Tobias Beith of Redburn asked if Lucid would divert resources to re-architect existing supply chains at the expense of the Midsize platform's timeline. He also questioned if the Gravity's launch, including reported finishing issues and studio test drive availability, was on track with the company's internal expectations from the start of the year.

Answer

Interim CEO Marc Winterhoff gave a clear "no" to the first question, stating that while they are working on Air and Gravity supply chains, it is not to the detriment of the Midsize program. Regarding the Gravity launch, he acknowledged some "hiccups," including software issues and a supplier bottleneck with the head-up display, which has since been made optional to maintain production flow. He confirmed deliveries are ongoing and that they are methodically resolving issues, preferring to delay studio car rollouts to ensure a high-quality customer experience.

Tobias Beith sought confirmation that lower inventory writedowns indicated improving underlying vehicle profitability and asked for more detail on cost-saving measures. He also questioned why the Gravity is considered a 'different platform' from the Air, given their similar wheelbases and the modular nature of the LEAP architecture.

Answer

Interim CFO Gagan Dhingra confirmed that lower impairments reflect better costs and that efficiency gains are being realized across BOM, logistics, and operations. CEO & CTO Peter Rawlinson explained that a different platform was necessary for the Gravity to achieve true SUV capabilities, such as greater wheel travel and a flat floor for three-row seating, which enables significant product differentiation from the Air sedan. He argued that while the platform structure differs, the most valuable components—the powertrain and software—have about 95% reuse, which is the key to cost efficiency.