Polestar Automotive Holding Uk Plc Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tobias Beith - Redburn Atlantic - Analyst : Hi. Good afternoon, Per and Bojana. Thanks for taking my questions, and good stuff again. I have three questions, please. And as usual, I'll ask them separately. Are you able to provide some more detail on the sequential improvement in COGS per external units? I identify a 14% reduction, which is quite notable. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 29, 2024 / 12:00PM, PSNY.OQ - Q2 2024 Polestar Automotive Holding Uk Plc Earnings Call

Question: Tobias Beith - Redburn Atlantic - Analyst : Okay, understood. But perhaps, maybe I can ask whether there was any sort of impairment or any releases that were exceptional in the second quarter versus the first quarter?

Question: Tobias Beith - Redburn Atlantic - Analyst : Okay. Great. Secondly, I observe a disconnect between operating income and free cash flow in the first quarter versus the second quarter. I was wondering if you can help me to understand the non-cash operating adjustments and the other parts of working capital in the second quarter. Is it just inventory that is responsible for the free cash improvement? And relatedly, what do you consider a normalized level of working capital for Polestar?

Question: Tobias Beith - Redburn Atlantic - Analyst : Okay. Great. And then my last question is relating to the Polestar 3 and Polestar 4. Would you describe both of those models as being sold out for 2024 in Europe and the US as of today?

Question: Tobias Beith - Redburn Atlantic - Analyst : Would you describe Polestar 3 and 4 as being sold out for 2024 in Europe and the US?

Question: Tobias Beith - Redburn Atlantic - Analyst : All right. Great. Helpful as always. Thank you.

Question: Andres Sheppard-Slinger - Cantor Fitzgerald - Analyst : Hi. Good morning, everyone. Thanks for taking our questions. Wanted to maybe start with deliveries for the second half of this year. So roughly,

Question: Andres Sheppard-Slinger - Cantor Fitzgerald - Analyst : Got it. Thanks, Per. That's super helpful. And maybe just a quick follow-up. I was wondering if you can just give us a reminder of where you stand on your capital needs. It looks like there was another $300 million in external funding raised recently. So just curious what that means for your upcoming capital needs. Thank you.

Question: Andres Sheppard-Slinger - Cantor Fitzgerald - Analyst : Wonderful. Super helpful, and thanks for taking our questions. I'll pass it.

Question: Trevor Young - Barclays Estimates - Analyst : Hi, Trevor Young for Dan today. I had a couple of questions here, if we could just go through. First, I wanted to drill down a little bit more. Tobias was asking about this, but I was just curious if you could perhaps quantify, the benefit you called out to gross profit related to the impairment release and the normalization of revenue recognition on sales of vehicles to the China JV? And just as an additional piece to that, if you could just give a sense of any additional opportunities on Polestar 2 gross margins beyond battery raw mats or if that is the main driver from here on Polestar 2?

Question: Trevor Young - Barclays Estimates - Analyst : Understood. And then I guess just following up on, specifically on the Polestar 4. I know you're launching it in Europe and the US, but I was just curious if you could give a little color on how Polestar 4 sales are trending in China and then give a few examples of how working with Geely on this platform has been a benefit versus the Polestar 2?

Question: Trevor Young - Barclays Estimates - Analyst : Understood. Thank you. If I could just squeeze in one more question here. I appreciate that you saw the strong working capital improvement in 2Q on the inventory drawdown, I think you quantified around $300 million. And I understand the focus on this, it's obviously very important. But how sustainable is this working capital strength against the ramp of two new models? Historically, ramping up of volumes is a working capital headwind. If you can give us a sense of how you're going to balance this and some of the levers you have to pull there?

Question: Trevor Young - Barclays Estimates - Analyst : Great. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 29, 2024 / 12:00PM, PSNY.OQ - Q2 2024 Polestar Automotive Holding Uk Plc Earnings Call

Question: Daniel Roeska - Bernstein - Analyst : Hi. Good morning. Good afternoon. Thanks for taking my questions. Maybe, Per, first, could we talk a little bit about the tariff situation? Kind of what have you seen developing? And then maybe to help us wrap our minds around the impact of this, could you give us a rough sense how much tariffs have weighed on the gross margins in the past? And whether that is -- whether there's any change expected in the upcoming quarters? And then relating to that, how does that relate to your statement earlier that you hope to achieve double-digit gross margins by the end of the year? And then I think the second one, it was already touched upon, but I'd like to bring it back to free cash flow. You had the working capital relief. If I strip that out, it looks like your ongoing cash burn is largely unchanged, right? If I look at the past couple of quarters, starting last year were somewhere between $470 million of cash burn the quarter. If I add back the $300 million you said on Q2, we're still at a $400 million cash burn. So how do you think that cash burn changes as you approach the volume scaling and the better gross margins in upcoming quarters? And are you in a position to give us, let's say, a range when you would expect that underlying cash burn to turn positive? Thanks.

Question: Daniel Roeska - Bernstein - Analyst : Right. Really super helpful. Thanks, Per.