Polestar, the struggling electric vehicle manufacturer, is changing tactics to boost sales after reporting a significant drop in deliveries. According to a Bloomberg report, the company’s new CEO is pushing for a more traditional sales approach by selling cars through dealerships, not just online.

A New Strategy for Survival

Polestar’s new chief executive, Michael Lohscheller, has launched a review of operations and strategy. The company is transitioning “from showing to actively selling cars,” as stated in a Friday announcement. This shift comes as Polestar reported a 15% drop in third-quarter deliveries, totaling 11,900 vehicles.

“Until recently, although customers could kick the tires and go for test drives at the Swedish manufacturer’s showrooms, they’ve had to turn to the company’s website to buy the cars,” the report notes.

Sales Plummet and Stock Tumbles

The EV maker’s struggles are evident in its recent performance:

Third-quarter deliveries fell 15% to 11,900
Total deliveries for the first nine months of 2024 dropped 23% to 32,300
Polestar shares plummeted as much as 12.5% in New York trading
The stock has tumbled by more than a third this year through Thursday’s close

Challenges in a Competitive Market

Polestar, controlled by Chinese billionaire Li Shufu, has faced several hurdles:

Delays in rolling out new models
Intense competition in China, a key target market for growth
Loss of most of its market value since spinning out of Volvo Car AB and listing on Nasdaq two years ago

Despite these challenges, the company remains optimistic. Lohscheller stated on Friday that “the adoption of a more active sales model is already bearing fruit.”

Financial Maneuvers

Polestar is taking steps to secure its financial footing:

The company is in “constructive dialog” with lenders regarding its loan covenants
In August, Polestar secured up to $300 million in additional external funding through a one-year revolving term loan facility

“The company said it expects revenue for this year to be similar to 2023. It reaffirmed a goal of achieving break-even cash flow by the end of next year but with lower volumes than it was previously targeting,” the report adds.

EVXL’s Take

Polestar’s shift to a more traditional sales model highlights the challenges facing new EV manufacturers in a rapidly evolving market. This move echoes similar strategies adopted by other EV makers like Lucid, which has also struggled with sales and production targets. As the EV market matures, we may see more companies blending online and dealership models to reach a wider customer base and compete with established automakers. The success of Polestar’s new strategy could provide valuable insights for the industry as a whole.

What’s your take on Polestar’s new sales approach? Share your thoughts in the comments below.