Polestar Automotive Holding UK Limited (Polestar (PSNY)) had a rough morning on Thursday, with shares sliding nearly 11% in premarket trading. The trigger? The company's second-quarter and first-half 2026 results, which painted a picture of an EV maker navigating a tougher competitive landscape and some regulatory speed bumps, especially in the U.S.
The numbers were a mixed bag. Revenue dropped 8.1% year-over-year to $727 million from $791 million, as retail volumes dipped and pricing stayed under pressure. U.S. restructuring costs didn't help either. Carbon-credit sales also took a hit, falling to $36 million from $61 million, while retail sales declined 4% to 17,296 vehicles.
Gross Margin: A Tale of Two Metrics
Here's where it gets interesting. The company's reported gross margin loss improved dramatically to 13.1% from a staggering 97.1% a year earlier. But that's mostly because the prior-year quarter included a massive $724 million impairment charge. Strip that out, and the picture is less rosy: the adjusted gross margin loss widened to 13.1% from 5.6%.
What drove the adjusted deterioration? Lower revenue, U.S. restructuring measures, and the absence of those one-time positive effects from last year. A higher mix of Polestar 4 vehicles provided some offset, but it wasn't enough to turn the tide.
On the bottom line, the net loss narrowed by 55.3% to $459 million from $1.027 billion, again thanks to that prior-year impairment. But adjusted EBITDA loss widened to $286 million from $206 million, reflecting the adjusted gross margin loss, restructuring costs, unfavorable foreign exchange movements, and lower other operating income.
Cash Burn Accelerates in First Half
Cash flow is where things get a bit more concerning. For the first half of 2026, operating cash outflow widened to $850 million from $498 million, and free cash outflow increased to $1.061 billion from $787 million. The company ended June with $888 million in cash, up from $719 million a year earlier, but the burn rate is something investors will be watching closely.
CEO Stresses Progress Amid Challenges
CEO Michael Lohscheller tried to strike an optimistic tone, noting that operational improvements are starting to show. The reported operating loss fell 43% year-over-year in the first half of 2026. He emphasized disciplined execution and improving the business despite the tough environment.
Lohscheller also pointed to product momentum. Polestar has ramped up production of the Polestar 4 SUV in Busan, South Korea, after opening orders. The first vehicles have shipped from the factory, and customer deliveries are expected to begin in the fourth quarter. And the first Polestar 5 vehicles should reach customers in the coming weeks, which could give the company a nice boost heading into year-end.
Guidance Cut: A Reality Check
But here's the kicker: Polestar lowered its 2026 volume guidance to low- to mid-single-digit growth, down from its earlier forecast of low-double-digit growth. The company cited first-half performance, a competitive market, and the transition from the Polestar 2 to the Polestar 4 SUV as reasons for the more cautious outlook.
Market Reaction
Investors didn't take the news well. Polestar shares were down 10.76% at $10.70 during premarket trading Thursday, according to market data.
It's a reminder that in the EV world, even progress on the product front can be overshadowed by financial realities. Polestar is making strides with its new models, but the road ahead remains bumpy.
