Electric vehicle manufacturer Polestar announced on Monday that it has secured a $400 million equity investment from Feathertop Funding Limited, a special purpose entity consolidated by Sumitomo Mitsui Banking Corporation and Standard Chartered Bank.
The transaction follows financing activity in December, when Spain's BBVA and France's Natixis provided an equity investment totaling $300 million and Polestar's majority owner, China's Geely Holding, agreed a loan arrangement worth up to $600 million.
Polestar said the newest equity infusion, together with the December funding and Geely's support, is helping the company improve its liquidity position and reinforce its balance sheet. "Following the new equity financing and the funding announcements in December, and with the support of Geely Holding, we continue to make progress on enhancing our liquidity position and strengthening our balance sheet," said Polestar CEO Michael Lohscheller.
The Swedish automaker has been operating under significant cash pressure amid a broader cooling in EV demand. Like many challengers in the electric vehicle space, Polestar has expended substantial cash while pursuing scale, and it has faced ongoing difficulties managing liquidity and its debt load.
Polestar has repeatedly confronted the possibility of violating certain debt covenants and has negotiated amendments with lenders on multiple occasions. The company and its creditors have agreed to revise some covenant terms in order to keep the automaker compliant through the current year.
In its statement, Polestar noted that, after the closing of the transaction, neither Sumitomo Mitsui nor Standard Chartered will hold more than 10% of the company's outstanding equity.
Context and implications
- The $400 million investment is routed through a bank-consolidated special purpose vehicle rather than direct share purchases by the two banks.
- Combined with the December equity and loan arrangements, the recent funding package is intended to shore up short-term liquidity and provide more breathing room for the company.
- Polestar continues to operate in an environment of slower EV market growth and persistent cash burn as it scales operations.
Polestar's announcement does not change the fact that the firm remains exposed to the same market and financing pressures it has described previously. The company will need to manage cash flow and creditor relations carefully while it works to translate the new funds into sustained financial stability.