Polestar’s Strategic Position Strengthened by Canadian Policy Shift

A recent policy change in Canada has created a significant near-term opportunity for electric vehicle manufacturer Polestar. By reopening its market to Chinese-made EVs through a new quota system, Canada has lowered a key trade barrier, positioning Polestar to potentially accelerate its North American sales. This development coincides with the company reporting robust growth in other key markets.

To support its ambitious growth plans, Polestar secured substantial funding in December 2025. The financing package consisted of a $600 million term loan facility from Geely Sweden Automotive Investment AB, complemented by a $300 million capital raise. This financial bolstering comes as the company's stock, trading recently at $22.24, has seen notable short-interest activity. Short interest plummeted by 95.8% to 1.68 million shares by mid-December, only to rebound by 33.5% to 2.25 million shares by the month's end. The current days-to-cover ratio of 7.6 suggests the potential for ongoing share price volatility.

Operational Growth and Regional Highlights

Polestar's global delivery figures for 2025 demonstrate strong momentum. The company sold 60,119 vehicles worldwide, representing a 34% increase over the previous year. The fourth quarter was particularly strong, with 15,608 units delivered, marking a 27% year-over-year rise.

A standout regional performance came from the United Kingdom, where sales surged by 95% in 2025. This exceptional growth in a mature European market underscores the brand's increasing appeal.

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The Canadian Opportunity: Details and Implications

The new Canadian regulations establish an annual import quota of up to 49,000 vehicles eligible for a reduced tariff rate of 6.1%. Half of this quota is reserved for vehicles priced below C$35,000. For Polestar, which already holds necessary North American certifications, the pathway to market is expedited. Transport Canada is expected to certify new Chinese EVs within approximately eight weeks, allowing for a relatively swift commercial response.

The immediate focus for Polestar will be securing a meaningful allocation from the 49,000-vehicle quota over the coming weeks, a factor that could directly influence near-term revenue.

Competitive Landscape and Long-Term Ambitions

In the Canadian market, the Polestar 3, with a starting price of $97,400, will compete directly with models like the Tesla Model Y and the Genesis GV60. On certain performance metrics, Polestar holds an advantage, offering up to 510 horsepower in its configurations. However, competitors like Tesla maintain leadership in areas such as charging infrastructure and efficiency; the Model Y is rated at 1.9 Le/100 km compared to the Polestar 3's 3.1 Le/100 km.

Looking ahead, Polestar has set ambitious long-term financial targets, aiming for $11.0 billion in revenue and a $559.6 million profit by 2028. Achieving this goal would require a compound annual revenue growth rate of approximately 63.1%. Given the capital-intensive nature of this expansion, market analysts remain cautious, with current consensus recommendations leaning toward "Reduce" or "Hold," reflecting concerns over the company's cash burn and substantial funding requirements.