Polestar (NASDAQ:PSNY), the Swedish electric vehicle maker backed by China’s Geely Automobile (OTCMKTS:GELYF), is pushing back production of its Polestar 3. The stock is selling off after earnings.
Polestar made the announcement while saying it delivered 12,076 cars in the first quarter of 2023. PSNY stock fell over 5% after the announcement and opened in New York this morning, May 11, at $3.69, with a market capitalization of about $8 billion.
PSNY stock has since dropped over 9% since the opening bell.
Geely chose Polestar’s homeland of Sweden to create an export-oriented EV brand after buying Volvo (OTCMKTS:VLVLY) from Ford Motor (NYSE:F) in 2010.
Polestar blamed software issues for the delay and said it is cutting 10% of its workforce. On an adjusted basis, Polestar lost $222 million in the first quarter, 10 cents a share, on revenue of $546 million. It had $844 million in cash at the end of the quarter, down from $973 million at the end of 2022. The ADR came public last year through a special purpose acquisition company (SPAC) that has since lost 59% of its value.
The Polestar 3 is a lower-cost version of the Polestar 4, a luxury EV the company introduced early this year in New York. Polestar expects to deliver 60,000-70,000 cars in 2023, up from 51,491 last year. There is no change in the delivery date of the Polestar 4. Current models are made in Chengdu, in western China, and in Taizhou in eastern China.
The loser here is the Volvo factory near Charleston, South Carolina, gearing up to produce the Polestar 3 and get tax credits under the Inflation Reduction Act.
Geely itself is doing well. The parent company sold 2.3 million cars last year, mostly in China, including over 600,000 Volvos. About 675,000 of Geely’s cars last year were electric.
PSNY Stock: What Happens Next?
The parent company’s stock is down only 38% on the OTC market since Polestar came public in the U.S. Investors seeking profit in the name might be better off there.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.