Volvo spinoff Polestar is facing a tumultuous 2025, with the electric vehicle (EV) maker announcing a revenue decline, accounting errors, and pressure from its lenders. The company's latest guidance indicates that it expects to generate less revenue in fiscal year 2024 than it did in 2023, a stark contrast to its previous estimates of stable sales.

The revenue decline is attributed to weaker-than-expected sales of the Polestar 3 and Polestar 4 models, which has been exacerbated by the ongoing global EV price war. This downward trend has put pressure on Polestar from its lenders, who provided a $950 million loan to the company last year. As part of the loan agreement, Polestar was expected to generate over $5.3 billion in revenue in 2024, a target that now seems unattainable.

In response to the revenue decline, Polestar has worked with its parent company, Geely Holdings, and the banks behind the loan to amend the revenue target. However, the exact nature of the revised target remains unclear. The company will report its final 2024 financial figures in the coming months, but investors can expect a "mid-teens percentage decline" in revenue compared to 2023's figure of $2.4 billion.

In addition to its revenue woes, Polestar has also announced that it will need to restate its financial statements dating back over two years due to accounting errors related to its tooling assets and liabilities. The company has acknowledged underreporting these assets and liabilities, as well as "other smaller errors" that will be corrected as part of the restatement process.

This news comes on the heels of a tumultuous 2024 for Polestar, which saw the company undergo layoffs, appoint a new CEO, CFO, and COO, and lose the financial backing of Volvo. Despite these challenges, Polestar remains committed to its product roadmap, with the Polestar 5 sedan set to launch later this year. The company also plans to expand its sales into France and has announced the development of the Polestar 7, a "premium compact SUV" that will enter a highly competitive and profitable vehicle segment.

While Polestar's future prospects remain uncertain, the company's ability to adapt to the rapidly changing EV market will be crucial to its survival. As the industry continues to evolve, Polestar must navigate its current challenges and find a way to regain its footing in the competitive landscape. Only time will tell if the company can overcome its difficulties and emerge as a major player in the EV market.