Polestar considers LFP battery transition amid sales stagnation

Polestar is considering a shift toward Lithium-Iron-Phosphate (LFP) battery technology to address stagnant sales and rising losses. While the company officially cites climate neutrality goals for this potential move, the transition is largely driven by the need to reduce production costs and offer more affordable models. Currently, the manufacturer relies on expensive nickel-manganese-cobalt chemistry, which contributes to negative gross margins.

Recent performance indicators show a marginal sales increase of only 0.6 percent, signaling a potential plateau for the Swedish-Chinese manufacturer. The company faces significant financial pressure, with current vehicle sales resulting in losses per unit. Moving to LFP cells, which are cheaper to procure industrially, could help Polestar compete in the volume market.

In addition to battery strategy, the brand faces challenges regarding market positioning. The Polestar 3, a high-performance SUV, has been noted for its technical capabilities but criticized for its high entry price, starting at approximately 80,000 euros. This pricing places the vehicle in competition with luxury brands like Porsche, while also facing internal competition from more affordable models like the Volvo EX60.