Full Year 2022 Polestar Automotive Holding Uk Plc Earnings Call

Speaker 1: Good day and thank you for standing by. Welcome to the both star fourth quarter and full year 2022 results conference call at this time or participants are in listen only mode. After the speakers presentation, there will be the question and answer session. To ask the question during the session, you will need to press star 11 on your telephone keypad.

Speaker 2: ahead.

Speaker 1: Thank you operator. Hello everyone my name is Barana Flynn from Paul's Car workplace.

Speaker 1: I will cover a few points before coming over to Thomas Inglot, our CEO , and Johan Marcus, our CFO . Their remarks will take about 15 minutes and will be making the line for any questions or questions received from our shareholders.

Speaker 1: Before handing over the call to Thomas, I would like to remind participants that many of our comments today will be considered forward-looking statements under the US Federal Securities Law and are subject to numerous risks and uncertainties that are also factually valid if the theory of the law has been communicated. Forward-looking statements made today are effective only as of today and post the I

Speaker 1: with the SEC or our investor after presentation, and recent press releases which can be found on our Invest Relations website.

Speaker 1: Further, we hereby advise you not to place Andrew's alliance from the preliminary estimated unaudited operational financial results for the year and call to end on December 31, 2022 that we are announcing today. Our independent registered accounting firm has not completed its audit of our year-end results.

Speaker 1: The preliminary estimated unordered information present today could be subject to material adjustments and we should not be considered substitutes to the annual report on Form 20S The bill will be filing for the year ending December 31, 2022.

Speaker 1: In addition, management will make reference to non-GAAP financial measures in the call. Our discussion of why we use non-GAAP financial measures, information regarding the conciliation of our non-GAAP financial measures with our most directly comparable GAAP measures, is available in our earnings press release as well as in the investor update presentation issued earlier today. With that, I'd like to turn the call over to Thomas. Please go ahead. Thank you, Bojana.

Speaker 3: And thank you to everyone who has joined our results. When I reflect on the outcome of 2000 between the two, and what life ahead, I'm confident we have the right strategy of capturing the market opportunities with our status below and the rapid product growth.

Speaker 3: With more than five years as CEO , I know that our focus on design, acquisition and sustainability is what resonates with the market and makes customers passionate about our brand. We now underpin the role we play in the much needed shift to sustainable mobility.

Speaker 3: Now, the recent achievement. I want to underline how delighted I am with everything we achieved in 2022. It was our biggest year yet, despite the fluid and challenging environment. There are many highlights of 2022 to mention.

Speaker 3: Most importantly,

Speaker 3: We delivered what we said we would. More than 50,000 vehicles globally.

Speaker 3: up 80% year on year. Today there are around 100,000 posters on the road in 27 markets.

Speaker 3: There are 158 retail locations and over 1100 points that our customer can get served.

Speaker 3: Only one other pure EV player in my swagazoo team has this kind of global problem. Thanks to the huge team effort, over 21,000 vehicles were delivered in the fourth quarter. Our record for today is half a cent per month for the national album of the winter.

Speaker 3: It wasn't in part of my stuff, which demonstrated the abilities and strengths, and I would like to thank everyone at Post-Gal that made this happen.

Speaker 3: We grew our revenues to $2.5 billion, up over 80%. Together with support from our major shareholders, we strengthened our liquidity.

Speaker 3: so that we can remain laser focused on business execution. A business execution that first and foremost prioritizes and safeguards our rapidly expanding premium product portfolio.

Speaker 3: despite prolonged macro and ongoing supply chain constraints. So, starting with design and our product development.

Speaker 3: We launched our first luxury as a re-costa free in October 2022 in Copenhagen. And we were extremely pleased with the reception that it received, including sporter intake today.

Speaker 3: POSA 3 is a powerful design-led electric performance ever released. That appears to the sensors with a distinct shape and excellent driving dynamics. It is a car that has been designed as a post-art from start to finish and built for the electric age.

Speaker 3: We are working closely with our manufacturing partners now to start the production in the middle of this year.

Speaker 3: Once the production in China promotes, the team will move to Charleston, South Carolina, looking to start US manufacturing in mid-2024. Keep an eye out this spring.

Speaker 3: We will host some exciting Polestar 3 events in the US, meeting customers, investors and media. In January we launched a major update of Polestar 2, a new high-tech frontend that reflects the design language premiered by Polestar 3, the Smart Zone.

Speaker 3: Polestar 2 also gets substantial sustainability and performance increases with a battery upgrade and new, more powerful and at the same time more efficient motors. For the first time in a Polestar, rear-wheel drive is Polestar 2. In short, we showed our continued love for Polestar 2 by keeping it alive and safe.

Speaker 3: make a factor that has ensured poster to niche is today among the top 10 best-selling battle in many markets including the UK, Sweden, Norway, Canada, South Korea and Australia.

Speaker 3: And as I promised, I'm happy to confirm that Post-A4 is in the starting block.

Speaker 3: You can't wait to show it to you and we will. Very very soon. Moving to innovation, another key pillar for positive.

Speaker 3: We recently reached an agreement with Google for our vehicles to benefit from their latest enhancement such as the new HD map in Costa 3 and the roll-out of remote actions for Costa 2. We are expanding our partnership with Lumion from Costa 3 to include...

Speaker 3: their LIDAR technology also in Post-A5. The utilization of LIDAR technology continues to gain momentum as a global focus on next-generation safety and autonomous increases. Worth mentioning, Post-A3 with LIDAR is available in delivery, order at post.com.

Speaker 3: Sustainability underpins everything we do. Our ambitious sustainability project continues to build momentum.

Speaker 3: In the last few weeks, we added further 8 new partners, bringing the total of 24 overall. And we are making strong strides towards our goal of creating a truly climate neutral car by 2050.

Speaker 3: We initiated the pathway report in response to climate crisis and in collaboration with Third World vaccination was to achieve the Shoulder Strike up interval between each other

Speaker 3: We believe collective actions to reduce greenhouse gas emissions in the supply chain and increase renewable energy in the grid are needed in addition to the faster EV production. To sum it up, I'm extremely excited for 2023. This year we will fundamentally build on all our achievements from 2022 and despite the still uncertain approved operating environment.

Speaker 3: plan to deliver 80,000 cars at 60% more than last year. Post- year, we would capture more of the market growth opportunities while always keeping true to our core pillars of design, innovation and sustainability.

Speaker 3: Now, I would like to ask Johan to comment on our financial results and give some guidance on 23 outlook.

Speaker 3: Thank you so much. Hello everyone and thank you for taking the time to join us today. It's great to see so many of you on the call and on the webcast.

Speaker 3: Starting with operational highlights first, we have delivered 51,491 cars globally in 2022, of which 21,067 in the fourth quarter, our record quarter to date. Let's just stop and reflect on that for a moment.

Speaker 3: delivering over 21,000 cars in the quarter is a fantastic achievement for a young company. As Thomas mentioned, it is an important milestone which demonstrates both our abilities and strengths.

Speaker 3: our ability to ramp up production, our ability to meet the logistical challenges of handing over the keys to over 21,000 customers across the globe in one quarter, and the strength of our brand and product.

Speaker 3: Most importantly, it demonstrates that we have the capability to execute in a fluid and built challenging environment.

Speaker 3: We are now active in 27 markets on four continents and have 158 sales locations and over 1,100 service ones

Speaker 3: We grew these by 40 to 50 percent, complimenting our digital first direct consumer approach with our expanding fiscal system. The method of

Speaker 3: We also recognize that it is still a challenging macro environment. And as I shared on the last earnings call, we started to take actions already last year. I am pleased to see that those initiatives have come through in the numbers, especially in our operating system. I am proud of what we have accomplished through the tremendous hard work and dedication of our entire organization.

Speaker 4: Moving to the financial highlights for full year 2020. The annual increase is 84%, from 1.3 billion to 2.5 billion.

Speaker 4: Many people have been by the increase in total for two years together. But continue to merge the expansion across all the shifting in the wind.

Speaker 4: We mainly sold non-range dual motor variant of the POT-32 in 2021.

Speaker 4: One in 2022, we introduced other variants, 12 for choice to our customers. Some at lower price points, which had an impact on average revenue per vehicle.

Speaker 4: With regards to market mix, our sales in 2022 were proportionately higher outside of Europe , where revenue per car is typically lower. And in terms of foreign exchange, this was due to strengthen US dollar versus predominantly European currency.

Speaker 4: Growth profit increased from 1,219 million, leading to an improved growth margin of 4.9%.

Speaker 4: This was driven by higher port-for-two sales and lower fixed manufacturing costs. And in the latter part of the year, price increased.

Speaker 4: Partial steps by foreign exchange, which led to higher cost of sales and product and marketing. Sailing general and administrative expenses were 21% higher as 865 million compared to 84% growth in revenues as we start to recruit benefits to scale.

Speaker 4: Research and development expenses were down 27% to $171 million due to the absence of postal 1 amortization.

Speaker 4: partially offset by higher spend on future vehicles and technologies. Operating loss, excluding the one-time share-based listing charge of 372 million, decreased 8% from 995 million to 914 million. Moving on to Q4 2022.

Speaker 4: I would like to point out four items. Revenues in the quarter were nearly 1 billion as we deliver 21,000 cars. A great achievement. Gross margin was 6.3%.

Speaker 4: Better than expected, as the full effect of the pricing increases, introduced early in the year, came through in the quarter, but input costs are still lagging, and only had a meaningful impact in December .

Speaker 4: Thirdly, serving general and administrative expenses were kept flat, compared to the same period last year.

Speaker 4: due to the active cost management that I mentioned earlier. And finally together, these resulted in the reduced operating loss of 205 million, down 39% when compared to Q4 2021.

Speaker 4: Moving on to cash flow. Cash use for operating activities for the full year was 1.1 billion.

Speaker 4: Manage driven by operating loss, working capital increase in inventory and trade receivables as a result of higher production and sales.

Speaker 4: and interest expenses due to increased financial investment. Cash used for investing activities for $0.7 billion, predominantly driven by intellectual property investments for post-R2, post-R3, and post-R4. Capix in Q4 was lower than expected, but largely due to timing.

Speaker 4: Cash provided by financing activities was 2.1 billion, driven by the net listing proceeds of 1.4 billion, and a net increase in short-term borrowing of 0.7 billion.

Speaker 4: support the continued growth of the company. So at the end of 2022, cash and cash equivalent stood at approximately one billion.

Speaker 4: Before I hand over to the operator, let me wrap up with the outlook for 2023. Global volume is expected to be approximately 80,000 cars, an increase of 60% year-on-year, predominantly driven by Pulse by 2 sales. We expect gross margin to be broadly aligned with 2022.

Speaker 4: with volume and product mix supporting marketing progression later in the year.

Speaker 4: And finally, we are on track in terms of liquidity, and as we previously communicated, we continued to explore potential equity and death offering to raise additional cash flows to fund.

Speaker 1: Thank you. As a reminder, if you wish to ask a question, you can press star 11 on your telephone keypad and wait for a name to be announced. To withdraw your question, please press star 11 again. Please then buy a World Compiler Q&A roster. This will take a few moments.

Speaker 5: Now we're going to take our first question.

Speaker 1: And the first question comes to line of Winnie Dung from Deutsche Bank. LeLine is open, please, after question. Hi, thank you so much for taking my questions. Can you guys hear me okay?

Speaker 5: Al.

Speaker 5: And.

Speaker 1: Okay, great. On your 2023 delivery target, you exited 2021 with pretty strong sort of cadence in the Q4 quarter. Any reason why we might not thank your ADK guidance is a conservative

Speaker 3: Yeah, I'm going to.

Speaker 3: Well, I think it's a well-known effect in the market that quarter one after quarter four is always that little dip that then picks up in spring again a very natural behavior.

Speaker 3: the overall guidance on 80,000 as a target for 2023. I think it's...

Speaker 3: It's just simply us being very realistic about.

Speaker 3: It's just simply us being very realistic about what we feel is.

Speaker 3: doable in a world which is, you know, struggling with warmth.

Speaker 3: still recovering from the effects from the pandemic. Yes, of course, we have a much better situation and comes to supply chain and logistics again. And the 80,000 is an increase of plus 60%. So I think that's...

Speaker 3: definitely something which we feel is a strong growth from where we ended in 2022 with 50,000 and then not to forget the big big bug of the 80,000 is the better post tattoo.

Speaker 3: which will have the very nice, great upgrade and tech. The effect of us expanding our product portfolio, very meaningful now with adding...

Speaker 3: start with now the poster three, but as well the poster four already in inside. That effect will of course be much much stronger and really to fully affect in 2024.

Speaker 4: And maybe just to follow on with just a a brief statement about the facing for the years, as Thomas mentioned, just the natural season out to the business, the volumes tend to be lower at the beginning of the year. And we expect volumes to be weighted towards the second half. And this is on the back of the recently launched post or two model year 24, as well as then with some of the post or three volumes expected to come in later in the year.

Speaker 1: We need to have further questions. I'm sorry I was only thanks for that. I was without helpful. Can you extend more on the growth margin trajectory for the year? You know, you're a little...

Speaker 4: No, absolutely, I can provide a little bit more color on the growth margins for this year. So as we guided in the release, we expect growth margins to be brought in line with 2022. With that being said, we do anticipate some pressure on margins during the first half of the year with the run rate impact of the raw material prices coming through.

Speaker 4: as well as some increased sales supporting select markets. We then expect margins to improve later in the year as the volumes pick up. And we start to see the impact of the model year 24 coming through, and as I mentioned, first deliveries of poll stars three. It's also worth mentioning that we have not assumed any reductions in the material costs during the year.

Speaker 5: Questions from the line of Tobias Space from Redburn? Your line is open. Please have the question.

Speaker 6: Hi, good afternoon. Thanks for taking my question. I got a couple. I guess...

Speaker 6: where I started on raw materials. What are your expectations for the impact of raw material on other cost inflation on earnings in 2023? I guess what I'm looking for is a figure in the hundreds and millions of dollars is that's okay. And I've got a couple of follow-ups. Thanks. Yeah, that's a tough answer. Question, Tan.

Speaker 4: input costs. So we really only saw that have and it come through in December .

Speaker 4: So with that in mind then, as I mentioned, we do expect some margin pressure during the first half of the year.

Speaker 4: because then the full-run rate impact of raw materials coming through and then later in the year, the margin then to improve.

Speaker 6: Okay, great. So just to make sure I understand in the fourth quarter, basically the margin improved because your raw material price inflation didn't increase or you didn't experience any inflation like you thought you would. But then you're going to start to realize...

Speaker 6: some of these increases in the first half of the year and then they get off sets in the second half of the year. Is that right? That's right. That's correct. Okay, great. And then just my second question is, if I ever look at your regional websites, it looks like the order boat for the Polestar 2 in the US covers less than one month's sales.

Speaker 6: versus ACE in Europe and roughly three in China. What sort of actions are you taking to increase brand awareness in North America and China, given how important to this success of the Pulse R3? I was also wondering if you were willing to share how your 2023 volume guides split by major region.

Speaker 7: Generally the order book that we...

Speaker 3: When left 2023, 2022 and 2003 is...

Speaker 3: is a good order book and we still are busy with working that down in regards of the activities that we have for the markets in

Speaker 3: U.S., we are very much actually start yesterday promoting the poster 2.

Speaker 3: does qualify for the incentives.

Speaker 3: when leased, so that is a program that we very much promote now and I think that the strengths of the POSA2 position in the market very much.

Speaker 3: And generally the brand awareness in the US is something that will along our build up of the post a three introduction into the market, us going now in April with a car on tour.

Speaker 3: the car coming to the spaces in the middle of the year. That is all orchestrated to be a nice build-up of a bus around the car and the brand. And yes, so that's very opposite to the...

Speaker 3: 2022 where we started with this big bang of

Speaker 3: being in a half time show in Super Bowl this year is much more targeted to the build up towards the middle of the year. And that maybe is very important to keep in mind when you judge now on post-Style in the US.

Speaker 4: And maybe just to then address the regional mix to give some color there, if we look at Fulia 22, the US accounted for a little bit short of a quarter of the sales and then as you know the predominantly the sales are in Europe , probably two thirds.

Speaker 4: with the remaining than the rest of the world, the ratio-specific. And I would expect a similar mix for 2023, perhaps with a slightly higher portion of the sales than APAC. OK, great. This is super helpful. Thank you very much. I'll pass the line on to someone else.

Speaker 5: Thank you.

Speaker 5: Thank you. Thank you. Now we're going to take over next question.

Speaker 5: And the next question comes to the line of Dan Levy from Buckleys. The line is open. Please ask a question.

Speaker 6: Hi, good afternoon to you. Thank you for taking the questions. I wanted to start by asking, I know you talked about group work here, maybe you can talk about the...

Speaker 4: I'm going to try this in the op-x. What we want to do for a point, I mean, we want the op-x on. Done. Done. Apologize to the line broke up. Would you mind repeating the question? We had a hard time hearing it.

Speaker 4: Yeah, I'll bet looking for underlying trends in off-backed and fake. Okay, I heard the first part of your question, you're looking for guidance in regards to off-backs. So what I can say there is that...

Speaker 4: We continue to apply a restrictive spend in light of the prolonged Challenging macro environment with that being said we also need to consider our expanded footprint and the fact that we are now established in 27 global markets so and then coupled with that We plan to dial up the marketing spend in preparation for the upcoming two car models

Speaker 4: and then ultimately post-R4. So all in all, I would expect SMG spent to increase year and year. I would say by similar percentage increase as you saw for 2022. Great. Thank you. Second question is I think earlier you made...

In the Q&A, you made a comment about sales support. Maybe you could just explain what that means. And also, just the pricing trend that relates to Polestar to one of your competitors, a large pure play, EVCO, made some headlines by cutting prices earlier in the year. So maybe you can talk about how the potential for price increase, price decreases actually factors into your thinking.

Yeah, maybe I can start with the first part. It's what I meant there is really us relates to the fact again that, you know, we're now establishing eight additional markets. And so of course, we need to get ourselves established there just as we have in the other ones in investing in the brand and our presence. That's what I was referring to there.

Yeah, Thomas here again regarding the pricing and the position. I think it's a very good moment in time now where it becomes very obvious the different...

Ideas where the companies are going to strategy, whilst the other PV player you were mentioning is obviously very much concentrating to go mass market in the future, to compete with the likes of Volkswagen and Toyota. Post-us ambition is of course to...

go fully into this premium luxury sports car segment. We have talked about that already. Yes, of course, POS 3 compares to a POS 2 compared to a Model 3, but it's coming POS 3, 4 and 5. It's very clearly targeted towards

product portfolio, a competition that's much more in the comparison to an electrified Porsche. So for that reason, we are keen on developing desirable cars that offer great, great tech and design, and of course they have their price.

Post that too upgrade that we are introducing now into the market is a very good example for that we upgraded the car not just only was a nice new front and it's really tech that we brought in there was Range improvement with stronger powerful engines

upgrade that we are introducing now into the market is a very good example for that. We upgraded the car, not just only was a nice new front and it's really tech that we brought in. There was range improvement with stronger powerful engines. And...

This value creation as well for the customer to be for them to have a stable, reliable value with this car. I think that is our premium strategy that we are determined to follow through. Thank you if I could just squeeze 1 more and please. I see your press release makes note that you are exploring potential equity or debt offerings to raise additional capital.

So if you could just remind us of the minimum cash balance required and what types of options you might have to gain additional liquidity. I know you just raised the facility with Volvo and Julie, what other sort of creative financing opportunities might there be beyond?

straight equity or net. Thank you. Sure, let me just address kind of broadly what you were talking about and then I can talk a little bit more specifically.

So, okay, as you mentioned, as we previously announced, then towards the end of last year, we obtained this 1.6 billion shareholder financing and liquidity support from a two-manage shareholder.

So this has definitely helped strengthen our financial position and then as you would have noticed as well, we had approximately a billion dollars of cash on the balance year and we now went for £10,000.

We of course continue to explore other funding options. I think we've demonstrated that through the course of 2022 in the form of local working capital facilities.

We also have the trade financing, facility, and place. Those are two examples. And we continue to explore avenues and funding sourcing, such as those. In addition to that, we also recognize that we do need to bring in and raise additional capital, either in the form of debt, continued debt.

either from the capital markets or equity or a combination of both. And that is something that we continue to explore. And the minimum cash balance.

Yeah, we don't necessarily guide on the minimum cash balance. I mean, we had a billion dollars at the end of 2022. We don't necessarily need to hold that amount of cash on hand as we stand right now. But that of course helps our financial position going into 2023. And what we also mentioned before was based upon this liquidity support from our shareholders alongside the cash on the balance sheet.

and other financial finance solutions that we expect to be adequately funded through 2023. Okay, thank you. Thank you. Thank you.

Here participants as a reminder if you wish to ask a question please press star 11 on your telephone keypad. The speakers are all over the questions. Oh please accept my apologies. We just got another question over the phone line. Please accept my apologies.

Excuse me. Tobias, your line is open. Do you move welcome to ask the question.

Sorry, hi, hi, I have myself amute. Thanks for squeezing me in again. If I remember rightly in the second quarter of 2023,

$120 million worth of pay for all due to Volvo cars. And I was just wondering, can you explain, I kind of, I guess, how you expect this to be covered? You know, is this going to be, they're going to come from the liquidity support from PSD? And I guess broadly, I'm actually interested in this.

out, we still have schedule payments of the overdue related part of payables towards Volvo that you make reference to. And those we are planning to settle down during the year. The settlement of those payables around the half a billion that you've mentioned that is part of the.

schedule payments of the overdue related part of payables towards Volvo that you make reference to. And those we are planning to settle down during the year. And the settlement of those payables around the half a billion that you've mentioned that is part of the.

the cash forecasting for the year. So that's contemplated in the prior statement where we expect to be adequately funded for 2023. Okay, great, thanks. Yep, you're welcome. Thank you. The speakers that are left for the questions over the audio lines, and I would now like to hand the conference over to management team for any written questions. Hi Thomas here again.

We have selected six of the top voted questions that reached us. And I will try now to answer them in the time that we have left here.

So let's have a look at question number one.

It's being said that Polestar is not known a brand, a known brand in the US. What are the efforts being taken to improve this? To start this I would love to...

Explain a bit the difference that we obviously have compared to some of our competitors' peers in the startup arena. Obviously our strategy was from day one to go out and develop our footprint quite harmoniously in all the regions, major important regions for EV, instead of what a lot of competitors aliasing in the VC0 road.

develop in your home country a strong, strong presence and then after those years of establishing that going out and going conquer more of the world. We can discuss what is more about our clear dedication was to do it the poster way and that is when I mentioned that the poster too is in amongst the top 10 best in

many markets, that is a result of it because yes, that's why we are in Korea, that's why we're in the UK and Sweden. In many countries, Australia, we are under the top 10 with our poster too. You can compare that. I mean, to grow one plant very fast, yeah, you can do that, but it's a very isolated one. I mean, I mean, now the botanical plant, sorry, not factories. But if you plant a lot of flowers and then they grow of course.

a big big amount but it grows a little slower. So if you in the US don't see our brand as much as you see competitors like you say it Rivian, yes I understand that that might be slightly irritating but you will see our brand and therefore in many many other countries where you never ever have seen a Rivian or Lucid.

Now, having said that, of course, we want to accelerate and progress in the US. And as mentioned a bit earlier, there's a full-fledged program over the course of the next 12 months. How we increase our brand awareness in the US. How we...

put obviously money behind it. There's four quarter to this year over 20 million US dollar allocated to work in the US and and build up brand awareness and I mentioned before it is not the big bang in the beginning with Super Bowl. It is indeed more targeted towards

going now with the POS 3 into the market and promoted. So indeed there is a little bit more of a build up towards summer. So the POS 3 arriving, the face of the POS 2 being promoted, all of that will of course heavily increase the awareness of POS 3. Last but not least, of course we...

expect as well a lot the fact that we are moving production of post-s3.

into the Charleston plant in the US, it will of course make as well a big, big impact on how much our products and our brand are present in the US market.

By the finally, yes, today we have, we have 30 spaces up and running in the US and we will of course continuously expand another 10 over the course of the year. Washington DC, Miami on the agenda as some of them coming. So I think all in all.

It will definitely be towards, in over the course of this year, again, another big step that Poster will make in the US. Question number two, found as well a lot of people who asked in that direction. Can you share any details on Poster's long term plans for expanding its product line? We will fundamentally transform form.

being a one model company to a company with a lineup of POSTA 2 POSTA 3 and then indeed POSTA 4 joining as well 2024 the POSTA company will have these three cars fully in the lineup POSTA 2 3 and 4

And I presume everybody knows that we are already with prototypes up and running with POSTA 5 preparing already for the next launch then end of 24 so that the POSTA 5 will be then fully available in the world in 25.

And this is Sherry on top of that cake, the poster 6 roadster, a car that will then complete that first round of product portfolio in 2026. This is the given perspective, kind of the...

bandwidth of where we see the brand poster in this first generation operating. We will, and that is again in probably in sharp contrast to other.

AV startups, we have of course very strong focus on not letting our product portfolio get old. We will then start looking into the second generation of the cars that we have put out there, not necessarily exactly the same as a repetition, but really working on keeping this customer base that we have built there and grow together with them.

Number three, we'll post our utilized Volvo dealerships for displaying selling and servicing Polestar vehicles. Well, we utilize the Volvo dealership, of course, heavily when it comes to servicing. How could we ever have done that roll-up of 1,100 service centers? This is, of course, working together and using Volvo cars, facilities and dealers.

The process spaces that we run and operate in most parts of the world, that it will contribute places where

Polestar is selling these cars, but they're operated and invested by post-a space investors who, indeed, we recruited who are we, we invited.

but they're operated and invested by post-space investors who, indeed, we recruited office neighbors who worked vice versa.

Volvo dealers to invest into this new form of post-a space. They have this special contrast, but of course they bring their expertise and all the knowledge of how to work with customers in a good way. And we harvest a lot on that expertise and have a very good business model together with them in the US.

North America, it's a bit different there. We work together with selected Volvo dealers to then invest into a poster space where they sell the car.

It is in the beginning, we've done very deliberately where the EV market was blossoming. And as we expand in the US and of course, electrification expands in the US, we will with small and more.

Volvedeelers do contracts to run post-a-spaces. So that definitely is only again, not to continue that very successful model that we have established in the first three years.

Do you think a new factor in the Carolina will help poster to ramp up production and increase market share within North America, especially since consumers may associate the brand with China? Yeah, absolutely. I mean, Carolina should be a big, big factor in making sure people understand poster is.

A European brand but with a global production footprint. Carolina is the first step. We will definitely have other steps following where we bring production into a more global spread. The capability of ramping up production apps. We will definitely have other steps following where we bring production into a more global spread.

that is the way how we will continue using this model. Next question is does the company have plans to offer more of an entry level model similar to Tesla Model 3?

Poster 2 defines very much the base and entry level for the brand Polestar and no we don't have any intention to launch and develop a model below Poster 2.

and very clearly.

We are not aiming to produce 10 or even 20 million cars per year. That's very clearly not the target of the brand post us. So for that reason, no, there is a very different ambition within our company. We will move our product portfolio up market and explore that end.

The S-Tex credit of $7.5,000 was a major incentive to buy poster. That's not the next question. Number six, does poster have plans to begin qualifying for the tax credit in the future? Does poster three, the poster three is priced above the tax credit threshold?

and the POS2 is not currently manufactured in the US. Well, POS2, it's currently qualified for the 7500 Federal Text Credit in the US when leased, and we have already adjusted our commercial plans for this and went to market yesterday, wasn't...

POS2 is not currently manufactured in the US. Well, POS2, it's currently qualified for the 7500 Federal Text Credit in the US when leased. And we have already adjusted our commercial plans for this and went to market yesterday with a competitive lease offering.

Post-3 at launch will not, we will deliver post-3 in a very heavily equipped luxurious specification, hence the higher MSRP. And at this time we are pleased with the order intake and do not see the need to lower the price, which would of course have an effect on our margin. And...

In the future, we could often enter variant of the vehicle which would then meet the tracks threshold, but that is then a discussion and something that we look upon in the future. Thank you Thomas. Hi everyone, Boyana here. I would just like to apologize. I believe we had some technical issues during the opening remarks and there was some interference on the sound. We will post the recording very soon on our website and make sure that those interference are taken out. I can only apologise for that and we will obviously improve going forward.

With that, I would just pass to Thomas for his call-os in remarks and thank you again for joining us. Yes, well from my side, a big thank you for the interest and you joining. We have heard, 2022 was a great year, really again. I mean, can imagine we had actually a really, really massive end of the year party because to celebrate that year. And looking forward, 2023, we have a fundamentally upgraded poster too.

Today, thank you for participating. You may now all disconnect. Have a nice day. Thank you.

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