Polestar, Fisker Continue Trend of Production Cuts
Polestar, which reported its Q3 results on Nov. 7, has yet again downgraded its production guidance for the year to 60,000, less than half of what executives initially aimed for at the beginning of the year. It marks the third time the company cut its guidance in 2023.
“Recognizing the impact on the profitability of our business, we have taken mitigating actions to temporarily cut production volumes in order to improve the inventory balances,” said CFO Johan Malmqvist.
Revenue for the quarter was $613 million, less than Q2’s $685 million and far below analysts’ estimates of $727 million. Profits also slipped 11% compared to last year, coming in at $3.6 million.
Operating expenses also ballooned in the quarter, rising 33% year-over-year to $261 million, although it is an improvement quarter-over-quarter from Q2’s $274 million.
Executives continued to be optimistic about the future, presenting a business plan that CEO Thomas Ingenlath said had been reworked “over the last few months” as they establish more long-term plans.
“We are reducing costs and improving efficiency to create a more resilient and profitable Polestar and reducing our funding needs at the same time,” he said.
The crux of the plan, according to a press release, “targets an accelerated margin improvement and a reduction of the Company’s total funding need” to the point where it will become cash-flow positive by 2025.
Ingenlath went more into detail during the earnings presentation, saying that steps would be taken to improve the margin, including flexible packages for greater customization and revenue generation and a more “focused approach” to Polestar’s market presence. Executives plan to shift investments from smaller, less-profitable markets into those that are performing better.
“It's not about leaving a market, but about directing our resources to where they give us the best impact,” said Ingenlath.
Nearly a week later, Fisker followed in Polestar’s footsteps with its third production guidance reduction of the year. Like Polestar, the primary reason for the cut was to focus on reducing inventory. CFO Geeta Gupta-Fisker said the new guidance would be 13,000 – 17,000 vehicles, down from August’s 20,000 – 30,000 downgrade. The company began the year with a forecast of 42,400 units.
“This is a very prudent change that we need to do to enable a global delivery and logistics platform to scale. So, we can serve our customers even better, and we are not sitting on inventory,” Gupta-Fisker said.
The start-up also struggled with deliveries in the quarter. Despite producing 4,725 vehicles, only 1,097 were delivered. CEO Henrik Fisker said that the delivery struggles were causing customers to be “annoyed” at the delay for vehicles they had already paid for.
To address the problem, Fisker has hired more people, to the tune of 20 to 30 a week, as well as added logistics partners to assist in last-mile transportation. In the month of October alone, the company delivered 1,200 vehicles, more than all of Q3’s volume.
Q3 was the first quarter of meaningful automotive revenue for the company, with the total coming to $71.8 million. However, this was offset by the cost of goods sold, which totaled just over $83 million. Revenue was also short of analysts’ estimates of $100 million.
Shares of Fisker (Ticker: FSR) dropped sharply after reported earnings, which had already been delayed a week. On Oct. 27, Fisker’s chief accounting officer departed the company and a new one was appointed on Nov. 6, the original date Fisker had set to release earnings. The earnings were delayed to Nov. 13, as was the filing of relevant forms due to “material weaknesses in the Company’s internal control over financial reporting.”
Fisker’s shares opened at $3.23 per share the day after reporting earnings, after closing at $4.11 per share the previous day. They then hit an all-time low of $3.11 per share and have contued to fall, currently sitting at $2.98 per share.
