Geely Extends $600 Million Lifeline to Struggling EV Maker Polestar

In a critical move to bolster its financial position, electric vehicle manufacturer Polestar has secured a substantial credit facility from its majority shareholder, Geely. The subordinated loan arrangement provides access to up to $600 million, offering a temporary reprieve as the company navigates significant operational losses and a steep decline in its share price.

The financing package is structured in two distinct tranches. An initial $300 million is committed and immediately available to Polestar. A second, uncommitted facility of $300 million is conditional, with its drawdown subject to Geely’s approval based on unspecified criteria. This conditional nature suggests the automaker must meet certain performance benchmarks to access the full amount.

Financial Implications and Sector Context

From a balance sheet perspective, the subordinated nature of this debt is crucial. It does not count against Polestar’s existing financial covenants, which govern its substantial liabilities of approximately $5.5 billion. The loan carries an interest rate of Term SOFR plus 3.00%, with a drawdown period extending through March 31, 2026.

The immediate $300 million infusion provides essential liquidity. However, it must be viewed against the company’s third-quarter net loss of $365 million, which widened from a $323 million loss in the same period last year. This equates the committed funds to roughly one additional quarter of operational runway, absent a meaningful improvement in revenue.

This financing arrives during a period of intense pressure across the electric vehicle sector. Shortly before Polestar’s announcement, Ford recorded a massive $19.5 billion write-down largely tied to its EV business. Furthermore, LiDAR supplier Luminar filed for Chapter 11 bankruptcy, events that collectively strain supply chains and investor sentiment, tightening refinancing conditions for the entire industry.

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Regulatory winds are also shifting. The European Union recently softened its 2035 target from a 100% reduction in emissions to a 90% reduction, with exceptions for e-fuels. This adjustment slightly reduces the regulatory tailwind that had been supporting pure-play EV manufacturers like Polestar.

Performance and Path Forward

Polestar’s equity has faced severe headwinds, declining approximately 61% year-to-date. The company recently executed a 1-for-30 reverse stock split to maintain its listing compliance on the Nasdaq exchange.

The near-term outlook is one of stabilized liquidity, but the path to sustainable recovery remains uncertain. The key question is whether Polestar can achieve the operational progress required to unlock the second $300 million tranche by early 2026. Success will likely depend on demonstrating measurable advances in sales growth and the execution of efficiency programs designed to reduce its cash burn rate.

Investors will be closely monitoring several upcoming milestones, including fourth-quarter 2024 financial results and concrete updates on cost-cutting initiatives and delivery ramp-ups. Without clear progress, this financial lifeline serves primarily as a temporary buffer, buying time for the operational turnaround the company desperately needs.