It’s tough to be a start-up in the car industry. It’s one thing to engineer a car ready for production, quite another to then put it into mass production, satisfy all kinds of legislation, manage sales channels and aftersales and generate public awareness.
No other product requires such careful cradle-to-grave management and burden as cars, and you have to do it for multiple models at the same time for wildly different global markets.
Tesla made a loss for 17 straight years before turning a profit in 2020 and is truly the anomaly for car-making start-ups achieving success; so many names have faded away (eg Faraday Future), others have got there but are struggling (eg Rivian) and Dyson got to the point of making a car, having spent billions to get it to production readiness, then pulled out anyway.
Then there's Polestar. It's a start-up in the sense that it didn’t exist as a car company a few years ago, yet in being spun out of Volvo and part of the Geely group, with access to all those technologies and other operations, it has had a huge leg-up from those truly starting from scratch.
Still, in being listed on the New York Stock Exchange, Polestar’s financial reports show just how tough life is as a start-up and how much money you need to spend in scaling up the business, building sales channels and in research and development before revenues come in on selling cars.
So far in 2023, Polestar has spent more than $1.5 billion (£1.2bn) in paying for day-to-day operations, development and continuing to scale the business.
To that end, Volvo and Geely have recently provided it with “additional liquidity” and the company is seeking a further $1.3bn (£1.0bn) in funding, all with the ultimate goal of Polestar becoming cash-flow break-even from 2025.
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