The electric car maker Polestar has announced plans to cut approximately 450 jobs globally, constituting about 15% of its total workforce. The decision comes in response to what the Swedish company describes as “challenging market conditions.” This move aligns with a broader trend in the automotive industry, where numerous manufacturers have expressed concerns about the sluggish growth of the electric vehicle (EV) market.

Over the past year, the anticipated surge in demand for EVs has been hampered by various factors, including insufficient consumer interest, substantial price reductions, reduced subsidies, and challenges in the supply chain. Polestar, like its counterparts, has faced difficulties navigating these hurdles. In November, the company adjusted its delivery forecasts and unveiled a revised business plan, with the aim of achieving cash flow breakeven by 2025 and decreasing its dependence on external funding from major stakeholders such as Volvo Cars and Geely.

As part of the restructuring outlined in its business plan, Polestar emphasizes the necessity to adapt the size of its business and operations. This entails a reduction in external expenditures and, unfortunately, a downsizing of its workforce, as highlighted by a spokesperson for the company. Polestar had previously signaled its commitment to cost-cutting initiatives in November, emphasizing the need to enhance profit margins.

The challenges faced by Polestar extend to its profitability goals, echoing the broader struggles of electric vehicle manufacturers. In January, the company reported missing its revised delivery target for 2023. Factors contributing to this setback included high inflation, diminished demand, and a price war sparked by industry leader Tesla.

Polestar’s decision to reduce its workforce reflects the complex landscape faced by electric car manufacturers as they navigate a market undergoing rapid changes and external pressures. The company’s emphasis on cost-cutting and business restructuring underscores the imperative for adaptability in the evolving electric vehicle industry.

Source: Reuters