Chinese-owned electric vehicle maker Polestar announced a reverse stock split on Wednesday as the struggling automaker fights to maintain its Nasdaq listing while reporting a widening third-quarter net loss of $365 million—up from $323 million in the same period last year.

The financial engineering maneuver comes as the Geely-backed EV maker faces a perfect storm of challenges: mounting losses, share prices languishing below the $1 Nasdaq minimum, and mounting questions about whether CEO Michael Lohscheller—who previously helmed now-bankrupt Nikola—can execute yet another turnaround.

Reverse Stock Split Buys Time But Fixes Nothing

Polestar’s reverse stock split will reduce the number of outstanding shares while proportionally increasing their individual value—a cosmetic fix that changes nothing about the company’s fundamental value. U.S.-listed shares fell approximately 4% in premarket trading following the announcement.

The company reported Q3 revenue jumped 36% year-over-year, but that growth couldn’t overcome the brutal reality: Polestar burned through an additional $42 million in losses compared to the same quarter in 2024. The math is simple and unforgiving.

Shares have cratered from their $13 debut price following a June 2022 SPAC merger, recently trading below the $1 threshold that triggers Nasdaq delisting warnings. The exchange warned Polestar in recent months that failure to maintain the minimum bid price requirement could result in removal from the listing.

Lohscheller’s Nikola Playbook: Cost Cuts, CEO Replacement, Dealer Pivot

Polestar CEO Michael Lohscheller is executing a familiar strategy. “As market conditions remain challenging, we continue to take steps to make our organization and operations more efficient,” he said in a statement.

Those “steps” include replacing the CEO—which Lohscheller attempted at Nikola before that company filed for Chapter 11 bankruptcy in February 2025. Lohscheller served as Nikola’s CEO from November 2022 until August 2023, when he departed citing family health reasons—just months before the company’s cash reserves dwindled to $47 million and the business collapsed entirely.

The company has taken steps to stem losses by cutting costs and shifting to a dealer-focused sales model while leaning harder on Europe to offset weak U.S. demand, where buyers increasingly favor hybrids and gasoline vehicles over pure EVs. When unveiling the Polestar 5 GT in September, the company announced it would skip launching the vehicle in both the U.S. and China—two of the world’s most lucrative automotive markets.

Tariffs, Debt, and Residual Value Guarantees Squeeze Margins

While third-quarter revenue rose 36%, Polestar was hammered by costs related to so-called residual value guarantees in North America. Common in EV leases, these guarantees force automakers like Polestar to cover the gap when resale values fall short of promised levels—an increasingly costly risk as used EV prices slide.

The majority-owned subsidiary of China’s Geely Holding—chaired by billionaire Li Shufu—faces additional headwinds from U.S. tariffs that hit margins and contributed to model delays. The company has struggled with its debt covenants and has had to negotiate amendments with lenders to stay compliant, according to the Reuters report.

These aren’t new problems. As we covered in October 2024, Polestar shifted to selling through dealerships after reporting a 15% drop in third-quarter deliveries. The company has been in “constructive dialog” with lenders about loan covenants for over a year.

Pattern of Optimism Followed by Disappointment

This isn’t the first time Polestar has painted a rosy picture before delivering disappointing results. In June 2025, the company secured a $200 million investment from PSD Investment, controlled by Geely founder Li Shufu, with CEO Lohscheller projecting that year as “the company’s strongest year for sales volumes and financial performance.”

Just months earlier in May 2025, Polestar announced a 31% reduction in quarterly losses, touting its cost-cutting measures as evidence the turnaround was working. The company delivered 12,304 vehicles in Q1 2025, up from 6,975 the previous year, and CEO Lohscheller declared:

“We are selling more cars, at improved margins… the geopolitical environment and market conditions are challenging, but we are on the right track.”

That optimism has evaporated. Q3 losses of $365 million suggest the “right track” was an illusion.

EVXL’s Take

The Polestar story is becoming painfully familiar in the EV startup space—and it’s worth remembering that Michael Lohscheller ran this exact playbook before at Nikola. He joined that struggling truck maker in February 2022, became CEO in November 2022, implemented aggressive cost cuts and operational restructuring, then departed in August 2023 citing family health reasons. Nikola filed for Chapter 11 bankruptcy less than 18 months later, with just $47 million in cash remaining.

Now at Polestar, Lohscheller is executing the same strategy: cost cuts, CEO replacement discussions, pivoting to dealer sales, and financial engineering like reverse stock splits to buy time. The difference is that Polestar has a wealthy Chinese parent company in Geely that can theoretically keep writing checks—but the question is whether they will.

A reverse stock split addresses exactly zero of Polestar’s fundamental problems. The company is bleeding cash, losing money on every vehicle sold when accounting for residual value guarantees, facing tariff headwinds, and competing in markets where consumers are increasingly choosing cheaper Chinese EVs or returning to hybrids and gasoline vehicles. Our May coverage noted the company’s progress, but Q3 results show that temporary improvements in gross margins don’t translate to actual profitability when you’re burning through $365 million per quarter.

The broader EV startup landscape is littered with bankruptcies—Fisker, Lordstown Motors, Arrival, and now Nikola have all collapsed. Traditional automakers like Volkswagen are posting their first quarterly losses since the pandemic while absorbing massive charges from failed EV strategies. Even Tesla is seeing sales collapse across Europe and China as competition intensifies and consumer demand weakens.

Polestar’s technical recalls haven’t helped either. The company recalled nearly 28,000 Polestar 2 vehicles in September 2025 for rearview camera failures—a problem that persisted despite a previous software fix in June 2024, prompting an NHTSA investigation in July. These quality control issues undermine brand credibility at exactly the wrong time.

The clock is ticking. Reverse stock splits buy time on the Nasdaq listing, but they don’t fix business models. Polestar needs to either achieve profitability quickly or find a white-knight buyer willing to absorb years of losses. Given that Nikola couldn’t find a buyer despite months of searching before its bankruptcy, Polestar shouldn’t count on a rescue.

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Photo credit: Polestar