A major electric vehicle (EV) is facing serious financial trouble. Polestar Automotive Holding (NASDAQ: PSNY), a Swedish EV maker once seen as a promising rival to Tesla, has issued a ‘going concern’ warning. This warning has raised doubts about the company’s ability to survive without extreme changes.
Polestar’s latest financial filings indicate that the company would file Chapter 11 bankruptcy unless it secures new funding. Recently, Polestar’s stock collapsed to around $1 per share, which is a steep fall from its $16 debut four years ago.
What Polestar’s “Going Concern” Disclosure Means
A “going concern” warning is one of the most serious announcements a public company can make. It means that management and auditors believe there is a “significant doubt” about whether the company will continue to be financially stable and operate smoothly with the expectation of indefinite existence over the next year.
Polestar’s warning indicates that the company may need to restructure, sell its assets, or file for bankruptcy protection. This is what part of Polestar’s unaudited financial statements reads.
“Uncertainty related to the execution of management’s liquidity and funding plan indicates the existence of a material uncertainty that may cast significant doubt upon Polestar’s ability to continue as a going concern.”
The Numbers Behind the Crisis
Despite Polestar’s stock dropping 17.30% to $1.10 on Wednesday, the company has sold 18,049 vehicles, up 38% year over year, with its retail sales going up 51% in the first half of 2025. But behind this growth is a net loss of $1.19 billion in the first half of 2025, which is almost double the year before. Polestar also had a negative operating cash flow of $497 million while its net current liabilities are approaching $3 billion.
Its gross margin in Q2 sank to -97% compared with +10.4% in the previous year due to a $739 million write-off on the Polestar 3 SUV, plus tariffs and higher costs of production.
Polestar has tried to stay afloat by raising $200 million through a stock sale, secured covenant changes with lenders, and tapped Geely for short-term loans. Despite all these efforts, analysts are still doubtful about Polestar’s long-term survival.
Garett Nelson, an analyst at the Center for Financial Research and Analysis (CFRA), evaluated Polestar’s financial situation and decided that its stock was too risky. He downgraded Polestar’s stock from Hold to Sell to allow investors to get rid of it. He also cut his price target from $1 to 50 cents, meaning that he believes the stock would lose its current value by half.
Why Polestar Is Struggling
Polestar is caught in a squeeze just like most EV startups. Its vehicles are priced above $70,000, which is the price for most premium tiers, considering that most buyers go for models under $30,000. It faces stiff competition from Tesla, which has continued to dominate the higher-end segment, and from Chinese automakers that can meet customers’ demand.
Big automakers like Ford and GM are also investing billions into electrification, leaving little room for smaller brands to scale. Analysts also noted that Polestar’s situation worsened when it separated from Volvo because it created an overlap without full financial support from its parent.
To make matters worse, the $7,500 U.S. federal EV tax credit expires at the end of September 2025, and this could make its models even more expensive. This shift will push more buyers to go for cheaper hybrids.
“We see Polestar’s struggles continuing as EV incentives are discontinued in the U.S. and as consumers increasingly turn toward hybrids,” Nelson said.
What It Means for Owners and Investors
Polestar insists that it’s on the right track, with improving sales and cost reductions. CEO Michael Lohscheller attributed this to the growing demand for newer models and a stronger retail network. Auditors, analysts, and investors, however, are doubting and questioning whether those gains are sufficient.
For shareholders, with bankruptcy on the table, volatility is highly likely to remain extreme. Owners of Polestar models should not be concerned, as Volvo dealerships will continue to service Polestar vehicles if the company undergoes restructuring. However, the repair costs could increase.
Considering the deepening losses, expiring incentives, and unresolved financial needs, Polestar’s ability to survive lies in its ability to raise new capital as soon as possible. For now, its “growing concern” warning means that its survival chances are so narrow.