Polestar Automotive Holding UK PLC 6-K/A, filed Sep 14, 2023
Polestar Automotive Holding UK PLC (PSNY)
6-K/A
2023-09-14
For: 2023-06-30
View Original
Added on
August 22, 2026
About this 6-K/A
Polestar Automotive Holding UK PLC filed this 6-K/A on September 14, 2023.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K/A
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of September 2023
Commission File Number: 001-41431
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
1
INFORMATION CONTAINED IN THIS REPORT ON FORM 6-K/A
This Amendment to the Form 6-K of Polestar Automotive Holdings UK PLC (“Polestar”), filed on August 31, 2023 (the “Original 6-K”), is being filed solely to provide Polestar’s Unaudited Condensed Consolidated Financial Statements as of June 30, 2023 and for the Three and Six Months Ended June 30, 2023 and 2022 (the “Financial Statements”) using interactive data files in inline eXtensible Business Reporting Language (iXBRL), as attached to this Form 6-K as Exhibit 99.1. The Financial Statements were previously provided without iXBRL as Exhibit 99.3 to the Original 6-K.
The information contained in Exhibit 99.1 shall be deemed to be incorporated by reference into Polestar’s registration statement on Form S-8 (File No: 333-267146) and registration statement on Form F-3 (File No. 333-266101) and to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.
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EXHIBIT INDEX
| Exhibit No. | Description of Exhibit | ||||
| 99.1 | Unaudited Condensed Consolidated Financial Statements as of June 30, 2023 and for the Three and Six months ended June 30, 2023 and 2022. | ||||
| 101.INS | XBRL Instance Document. | ||||
| 101.SCH | XBRL Taxonomy Extension Schema Document. | ||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | ||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | ||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | ||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | ||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). | ||||
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
POLESTAR AUTOMOTIVE HOLDING UK PLC
Date: September 14, 2023
By: /s/ Thomas Ingenlath
Name: Thomas Ingenlath
Title: Chief Executive Officer
By: /s/ Johan Malmqvist
Name: Johan Malmqvist
Title: Chief Financial Officer
4
The Polestar Group
Unaudited Condensed Consolidated Financial Statements as of June 30, 2023 and for the Three and Six months ended June 30, 2023 and 2022
1
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| Page | |||||
Unaudited Condensed Consolidated Statement of Loss and Comprehensive Loss for the Three and Six months ended June 30, 2023 and 2022 | 3 | ||||
Unaudited Condensed Consolidated Statement of Financial Position as of June 30, 2023 and December 31, 2022 | 4 | ||||
Unaudited Condensed Consolidated Statement of Cash Flows for the Six months ended June 30, 2023 and 2022 | 5 | ||||
Unaudited Condensed Consolidated Statement of Changes in Equity for the Six months ended June 30, 2023 and 2022 | 6 | ||||
Notes to Unaudited Condensed Consolidated Financial Statements | 7 - 19 | ||||
2
Polestar Automotive Holding UK PLC
Unaudited Condensed Consolidated Statement of Loss and Comprehensive Loss
(in thousands of U.S. dollars except per share data and unless otherwise stated)
| Consolidated Statement of Loss | For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||
| Note | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||
| Revenue | 2 | |||||||||||||||||||
| Cost of sales | ( | ( | ( | ( | ||||||||||||||||
| Gross profit/(loss) | ( | |||||||||||||||||||
| Selling, general and administrative expense | 3 | ( | ( | ( | ( | |||||||||||||||
| Research and development expense | 3 | ( | ( | ( | ( | |||||||||||||||
| Other operating income (expense), net | ( | ( | ||||||||||||||||||
| Listing expense | 8 | ( | ( | |||||||||||||||||
| Operating loss | ( | ( | ( | ( | ||||||||||||||||
| Finance income | ||||||||||||||||||||
| Finance expense | ( | ( | ( | ( | ||||||||||||||||
| Fair value change - Earn-out rights | 8 | |||||||||||||||||||
| Fair value change - Class C Shares | 8 | |||||||||||||||||||
| Loss before income taxes | ( | ( | ( | ( | ||||||||||||||||
| Income tax expense | ( | ( | ( | ( | ||||||||||||||||
| Net loss | ( | ( | ( | ( | ||||||||||||||||
| Net loss per share (in U.S. dollars) | 5 | |||||||||||||||||||
| Basic and diluted | ( | ( | ( | ( | ||||||||||||||||
| Consolidated Statement of Comprehensive Loss | ||||||||||||||||||||
| Net loss | ( | ( | ( | ( | ||||||||||||||||
| Other comprehensive income/(loss): | ||||||||||||||||||||
| Items that may be subsequently reclassified to the Consolidated Statement of Loss: | ||||||||||||||||||||
| Exchange rate differences from translation of foreign operations | ( | ( | ||||||||||||||||||
| Total other comprehensive income/(loss) | ( | ( | ||||||||||||||||||
| Total comprehensive loss | ( | ( | ( | ( | ||||||||||||||||
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
3
Unaudited Condensed Consolidated Statement of Financial Position
(in thousands of U.S. dollars unless otherwise stated)
| Note | June 30, 2023 | December 31, 2022 | |||||||||
| Assets | |||||||||||
| Non-current assets | |||||||||||
| Intangible assets and goodwill | 6 | ||||||||||
| Property, plant, and equipment | |||||||||||
| Vehicles under operating leases | 4 | ||||||||||
| Other non-current assets | |||||||||||
| Deferred tax asset | |||||||||||
| Other investments | 7 | ||||||||||
| Total non-current assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | |||||||||||
| Trade receivables | |||||||||||
| Trade receivables - related parties | 11 | ||||||||||
| Accrued income - related parties | 11 | ||||||||||
| Inventories | |||||||||||
| Current tax assets | |||||||||||
| Assets held for sale | 12 | ||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Total assets | |||||||||||
| Equity | |||||||||||
| Share capital | ( | ( | |||||||||
| Other contributed capital | ( | ( | |||||||||
| Foreign currency translation reserve | |||||||||||
| Accumulated deficit | |||||||||||
| Total equity | 9 | ||||||||||
| Liabilities | |||||||||||
| Non-current liabilities | |||||||||||
| Non-current contract liabilities | 2 | ( | ( | ||||||||
| Deferred tax liabilities | ( | ( | |||||||||
| Other non-current provisions | ( | ( | |||||||||
| Other non-current liabilities | ( | ( | |||||||||
| Earn-out liability | 7, 8 | ( | ( | ||||||||
| Other non-current interest-bearing liabilities | 4 | ( | ( | ||||||||
| Total non-current liabilities | ( | ( | |||||||||
| Current liabilities | |||||||||||
| Trade payables | ( | ( | |||||||||
| Trade payables - related parties | 11 | ( | ( | ||||||||
| Accrued expenses - related parties | 11 | ( | ( | ||||||||
| Advance payments from customers | ( | ( | |||||||||
| Current provisions | ( | ( | |||||||||
| Liabilities to credit institutions | 10 | ( | ( | ||||||||
| Current tax liabilities | ( | ( | |||||||||
| Interest-bearing current liabilities | 4 | ( | ( | ||||||||
| Interest-bearing current liabilities - related parties | 11 | ( | ( | ||||||||
| Current contract liabilities | 2 | ( | ( | ||||||||
| Class C Shares liability | 7, 8 | ( | ( | ||||||||
| Other current liabilities | ( | ( | |||||||||
| Other current liabilities - related parties | 11 | ( | ( | ||||||||
| Total current liabilities | ( | ( | |||||||||
| Total liabilities | ( | ( | |||||||||
| Total equity and liabilities | ( | ( | |||||||||
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
4
Polestar Automotive Holding UK PLC
Unaudited Condensed Consolidated Statement of Cash Flows
(in thousands of U.S. dollars unless otherwise stated)
| For the six months ended June 30, | |||||||||||
| Note | 2023 | 2022 | |||||||||
| Cash flows from operating activities | |||||||||||
| Net loss | ( | ( | |||||||||
| Adjustments to reconcile net loss to net cash flows: | |||||||||||
| Depreciation and amortization expense | |||||||||||
| Warranties | |||||||||||
| Inventory impairment | |||||||||||
| Finance income | ( | ( | |||||||||
| Finance expense | |||||||||||
| Fair value change - Earn-out rights | 8 | ( | ( | ||||||||
| Fair value change - Class C Shares | 8 | ( | ( | ||||||||
| Listing expense | |||||||||||
| Income tax expense | |||||||||||
| Other non-cash expense (income) | ( | ||||||||||
| Change in operating assets and liabilities: | |||||||||||
| Inventories | ( | ||||||||||
| Contract liabilities | 2 | ||||||||||
| Trade receivables, prepaid expenses and other assets | |||||||||||
| Trade payables, accrued expenses and other liabilities | ( | ( | |||||||||
| Interest received | |||||||||||
| Interest paid | ( | ( | |||||||||
| Taxes paid | ( | ||||||||||
| Cash used for operating activities | ( | ( | |||||||||
| Cash flows from investing activities | |||||||||||
| Additions to property, plant and equipment | ( | ( | |||||||||
| Additions to intangible assets | 6 | ( | ( | ||||||||
| Additions to other investments | ( | ||||||||||
| Proceeds from the sale of property, plant and equipment | |||||||||||
| Cash used for investing activities | ( | ( | |||||||||
| Cash flows from financing activities | |||||||||||
| Proceeds from short-term borrowings | 10, 11 | ||||||||||
| Principal repayments of short-term borrowings | 10, 11 | ( | ( | ||||||||
| Principal repayments of lease liabilities | 4 | ( | ( | ||||||||
| Proceeds from the issuance of share capital and other contributed capital | |||||||||||
| Transaction costs | ( | ||||||||||
| Cash provided by financing activities | |||||||||||
| Effect of foreign exchange rate changes on cash and cash equivalents | ( | ( | |||||||||
| Net increase in cash and cash equivalents | |||||||||||
| Cash and cash equivalents at beginning of period | |||||||||||
| Cash and cash equivalents at end of period | |||||||||||
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
5
Polestar Automotive Holding UK PLC
Unaudited Condensed Consolidated Statement of Changes in Equity
(in thousands of U.S. dollars unless otherwise stated)
| Note | Share capital | Other contributed capital | Currency translation reserve | Accumulated deficit | Total | |||||||||||||||
| Balance as of January 1, 2022 | ( | ( | ( | |||||||||||||||||
| Net loss | — | — | — | |||||||||||||||||
| Other comprehensive income | — | — | ( | — | ( | |||||||||||||||
| Total comprehensive loss | ( | |||||||||||||||||||
| Merger with Gores Guggenheim, Inc. | 8 | |||||||||||||||||||
| Changes in the consolidated group | ( | — | ( | ( | ||||||||||||||||
| Issuance of Volvo Cars Preference Shares | ( | ( | — | — | ( | |||||||||||||||
| Issuance to Convertible Note holders | ( | — | — | |||||||||||||||||
| Issuance to PIPE investors | ( | ( | — | — | ( | |||||||||||||||
| Issuance to GGI shareholders | ( | ( | — | — | ( | |||||||||||||||
| Listing expense | — | ( | — | — | ( | |||||||||||||||
| Transaction costs | — | — | — | |||||||||||||||||
| Earn-out rights | — | — | — | |||||||||||||||||
| Equity-settled share-based payment | 3 | ( | — | — | ( | |||||||||||||||
| Balance as of June 30, 2022 | ( | ( | ||||||||||||||||||
| Balance as of January 1, 2023 | ( | ( | ||||||||||||||||||
| Net loss | — | — | — | |||||||||||||||||
| Other comprehensive loss | — | — | — | |||||||||||||||||
| Total comprehensive loss | ||||||||||||||||||||
| Equity-settled share-based payment | 3 | ( | ( | — | — | ( | ||||||||||||||
| Balance as of June 30, 2023 | ( | ( | ||||||||||||||||||
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
6
Notes to the Unaudited Condensed Consolidated Financial Statements
(in thousands of U.S. dollars unless otherwise stated)
Note 1 - Significant accounting policies and judgements
General information
Polestar Automotive Holding UK PLC (formerly known as Polestar Automotive Holding UK Limited) (the “Parent”), together with its subsidiaries, hereafter referred to as “Polestar," “Polestar Group,” and the “Group," is a limited company incorporated in the United Kingdom. Polestar Group operates principally in the automotive industry, engaging in research and development, manufacturing, branding and marketing, and the commercialization and selling of vehicles, technology solutions, and services related to battery electric vehicles. Polestar Group has a presence in 27 markets across Europe, North America, and Asia. Polestar Group has its management headquarters located at Assar Gabrielssons väg 9, 418 78 Göteborg, Sweden.
As of June 30, 2023, related parties own 88.3 % of the Group. Of related party ownership, Snita Holding B.V. owns 48.3 %, PSD Investment Limited owns 39.2 %, and various other entities own 0.8 %. The remaining 11.7 % of the Group is owned by external investors.
Basis of preparation
The Unaudited Condensed Consolidated Financial Statements in this interim report of Polestar Group are prepared in accordance with International Accounting Standards (“IAS”) 34, Interim Financial Reporting (“IAS 34”), as adopted by the International Accounting Standards Board (“IASB”). The Unaudited Condensed Consolidated Financial Statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below. For group financial reporting purposes, Polestar Group companies apply the same accounting principles, irrespective of national legislation, as defined in the Group accounting directives. Such accounting principals have been applied consistently for all periods, unless otherwise stated.
This interim report is prepared in the presentation currency, U.S. Dollar (“USD”). All amounts are stated in thousands of USD (“TUSD”), unless otherwise stated.
Periods discussed prior to June 23, 2022 represent the operations of Polestar Automotive Holding Limited and its consolidated subsidiaries.
Going concern
Polestar Group’s Unaudited Condensed Consolidated Financial Statements have been prepared on a basis that assumes Polestar Group will continue as a going concern and the ordinary course of business will continue in alignment with Management’s 2024-2028 business plan.
Management assessed Polestar Group’s ability to continue as a going concern and evaluated whether there are certain events or conditions, considered in the aggregate, that may cast substantial doubt about Polestar Group’s ability to continue as a going concern. All information available to Management pertaining to the twelve-month period after the issuance date of these Unaudited Condensed Consolidated Financial Statements was used in performing this assessment.
Historically, Polestar Group has financed its operations primarily through short-term working capital loan arrangements with credit institutions (i.e., 12 months or less), contributions from shareholders, credit facilities from related parties, and extended trade credit from related parties. Since inception, Polestar Group has generated recurring net losses and negative operating and investing cash flows. Net losses for the three months ended June 30, 2023 and 2022 amounted to $304,057 and $228,244 , respectively. Net losses for the six months ended June 30, 2023 and 2022 amounted to $313,035 and $502,734 , respectively. Negative operating and investing cash flows for the six months ended June 30, 2023 and 2022 amounted to $941,828 and $916,331 , respectively. Management forecasts that Polestar Group will continue to generate negative operating and investing cash flows in the near future, until sustainable commercial operations are achieved. Securing financing to support operating and development activities represents an ongoing challenge for Polestar Group.
Management’s 2024-2028 business plan indicates that Polestar Group depends on additional financing that is expected to be funded via a combination of new short-term working capital loan arrangements, long-term loan arrangements, credit facilities from related parties, and executing capital market transactions through offerings of debt and/or equity. The timely realization of these financing endeavors is crucial for Polestar Group’s ability to continue as a going concern. If Polestar is unable to obtain financing from these sources or if such financing is not sufficient to cover forecasted operating and investing cash flow needs, Polestar Group will need to seek additional funding through other means (e.g., issuing new shares of equity or issuing bonds). Management has no certainty that Polestar Group will be successful in securing the funds necessary to continue operating and development activities as planned.
Based on these circumstances, Management has determined there is substantial doubt about Polestar Group’s ability to continue as a going concern. There are ongoing efforts in place to mitigate the uncertainty. The Unaudited Condensed Consolidated Financial Statements do not include any adjustments to factor for the going concern uncertainty.
Adoption of new and revised standards
In May 2023, the IASB issued amendments to IAS 12, Income taxes: International Tax Reform – Pillar Two Model Rules, to clarify the application of IAS 12, Income Taxes, to income taxes arising from tax law enacted or substantively enacted to implement the Organization for Economic Co-operation and Development (OECD)/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) Pillar Two model rules (Pillar Two income taxes). The amendments introduce: (i) a mandatory temporary exception to the accounting for deferred taxes arising from the jurisdictional implementation of the Pillar Two model rules, which was effective immediately upon issuance of the amendment, and (ii) disclosure requirements for affected entities to help users of the financial statements better understand an entity’s exposure to Pillar Two income taxes arising from that legislation, particularly before the effective date of the Pillar Two model rules, which apply for annual reporting periods beginning on or after January 1, 2023, but not for any interim periods ending on or before December 31, 2023.
7
Notes to the Unaudited Condensed Consolidated Financial Statements
(in thousands of U.S. dollars unless otherwise stated)
Presentation, basis of consolidation, segment reporting, and foreign currency
For a detailed description of the Group’s presentation, basis of consolidation, segment reporting, and foreign currency, including currency risk, refer to Note 1 - Significant accounting policies and judgements and Note 2 - Financial risk management of the Consolidated Financial Statements for Polestar Automotive Holding UK PLC, as of December 31, 2022 and 2021, and for the three years ended December 31, 2022, that were included in the Form 20-F filed with the SEC on April 14, 2023. There are no changes for the periods presented in these Unaudited Condensed Consolidated Financial Statements.
The following tables show the breakdown of the Group’s revenue from external customers and non-current assets by geographical location where the Polestar company recognizing the revenue is located:
| For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||
| Revenue | 2023 | 2022 | 2023 | 2022 | |||||||||||||
| UK | |||||||||||||||||
| USA | |||||||||||||||||
| Sweden | |||||||||||||||||
| Germany | |||||||||||||||||
| Canada | |||||||||||||||||
| Netherlands | |||||||||||||||||
| Australia | |||||||||||||||||
| Belgium | |||||||||||||||||
| Norway | |||||||||||||||||
| Italy | |||||||||||||||||
| Denmark | |||||||||||||||||
| Finland | |||||||||||||||||
| China | |||||||||||||||||
Other regions1 | |||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||
1 - Other regions primarily consist of Austria, Korea, Spain and Switzerland in 2023. Other regions primarily consist of Korea, Switzerland and Austria in 2022.
| As of June 30, 2023 | As of December 31, 2022 | |||||||
Non-current assets2 | ||||||||
| Sweden | ||||||||
| China | ||||||||
| Germany | ||||||||
| United Kingdom | ||||||||
| USA | ||||||||
Other regions3 | ||||||||
| Total | $ | $ | ||||||
2 - Non-current assets: excludes Deferred tax asset and Other investments.
3 - Other regions primarily consist of Switzerland, Belgium, Netherlands and Australia in 2023. Other regions primarily consist of Belgium, Switzerland and Australia in 2022.
Restatement of certain comparative period items
Net loss per share for the six months ended June 30, 2022 has been restated to reflect the number of equivalent shares issued by the Parent to the Former Parent in connection with the merger with Gores Guggenheim, Inc. on June 23, 2022. The adjustment is based on the number of shares outstanding on the reporting date multiplied by the exchange ratio of 8.335 .
In the Unaudited Condensed Consolidated Statement of Changes in Equity as of June 30, 2022, the lines previously presented as Merger with Gores Guggenheim Inc. and Changes in the consolidated group amounting to an equity impact of $199,628 have been
8
Notes to the Unaudited Condensed Consolidated Financial Statements
(in thousands of U.S. dollars unless otherwise stated)
adjusted to present each individual item related to the merger that impacted equity, resulting in an aggregate restated equity impact of $199,564 .
Accounting policies
Polestar Group continues to apply the same accounting policies, methods, estimates and judgements as described in Note 1 - Significant accounting policies and judgements of the Consolidated Financial Statements for Polestar Automotive Holding UK PLC, as of December 31, 2022 and 2021, and for the three years ended December 31, 2022, that were included in the Form 20-F filed with the SEC on April 14, 2023.
Use of estimates and judgements
The preparation of these Unaudited Condensed Consolidated Financial Statements, in accordance with IAS 34, requires management to make judgements, estimates, and assumptions that affect the application of the Group’s accounting policies, the reported amount of assets, liabilities, revenues, expenses, and other related financial items. Management reviews its estimates and assumptions on a continuous basis; changes in accounting estimates are recognized in the period in which the estimates are revised, and prospectively thereafter. Actual results could differ materially from those estimates using different assumptions or under different conditions. The Group did not have any events requiring the application of new critical estimates and judgements during the six months ended June 30, 2023.
Earnings per share
Basic earnings per share is calculated by dividing the net loss for the period by the weighted average number of Class A Shares and Class B Shares outstanding during the period. Diluted earnings per share is calculated by adjusting the net income for the period and the weighted average number of Class A Shares and Class B Shares outstanding for the effect of dilutive potential ordinary shares (“POSs”) outstanding during the period (i.e., Class A Shares and/or Class B Shares that the Group is obligated to issue, or might issue under certain circumstances, in accordance with various contractual arrangements). The Group’s POSs are classified based on the nature of their instrument or arrangement and then the earnings per incremental share (“EPIS”) is calculated for each class of POS to determine if they are dilutive or anti-dilutive. Anti-dilutive POSs are excluded from the calculation of dilutive earnings per share.
EPIS is calculated as (1) the consequential effect on profit or loss from the assumed conversion of the class of POS (i.e., the numerator adjustment) divided by (2) the weighted average number of outstanding POSs for the class (i.e., the denominator adjustment). The EPIS denominator adjustment depends on the class of POS. The Group’s classes of POSs and their related EPIS denominator adjustment methods are as follows:
| POS Class | EPIS Denominator Adjustment Method | ||||
| Unvested equity-settled RSUs | Treasury share1 | ||||
| Class C Shares | Treasury share | ||||
| Earn-out rights and PSUs | The number of shares issuable if the reporting date were the end of the contingency period | ||||
| Convertible Notes | The number of shares issued assuming conversion occurred at the beginning of the reporting period | ||||
| Convertible Credit Facility with Volvo Cars | If the instrument is converted, the number of shares issued on the date of the conversion | ||||
1 - The treasury share method prescribed by IAS 33, Earnings Per Share (“IAS 33”), includes only the bonus element as the EPIS denominator adjustment. The bonus element is the difference between the number of ordinary shares that would be issued at the exercise of the options and the number of ordinary shares deemed to be repurchased at the average market price.
Fair value measurement
Valuation methodology for the fair value of the financial liability related to the Class C-2 Shares
The Class C-2 Shares represents a derivative financial instrument that is carried at fair value through profit and loss (“FVTPL”) by reference to Level 2 measurement inputs because an observable price for the Class C-1 Shares, which are almost identical instruments, is available in the active market. Class C Shares are presented in current liabilities within the Unaudited Condensed Consolidated Statement of Financial Position as they can be exercised by the holder at any time. The related liability is measured at fair value, with any changes in fair value recognized in earnings. The fair value of the Class C-2 Shares is determined using a binomial lattice option pricing model in a risk-neutral framework whereby the future prices of the Class A Shares are calculated assuming a geometric Brownian motion (“GBM”). For each future price, the Class C-2 payoff amount is calculated based on the contractual terms of the Class C-2 Shares, including assumptions for optimal early exercise and redemption, and then discounted at the term-matched risk-free rate. The final fair value of the Class C-2 Shares is calculated as the probability-weighted present value over all modeled future payoff amounts. As of June 30, 2023, the fair value of the Class C-2 Shares was determined to equal $3,105 by leveraging the closing price of the Class C-1 Shares on the Nasdaq of $0.69 per share, an implied volatility of 94 %, a risk-free rate of 4.27 %, a dividend yield of 0 %, and a 1,000 time-steps for the binomial lattice option pricing model. Refer to Note 8 - Reverse recapitalization for more detail on the Class C-2 Shares.
Valuation methodology for the fair value of the financial liability related to the Former Parent’s contingent earn-out rights
The Former Parent’s contingent earn-out right represents a derivative financial instrument that is carried at FVTPL by reference to Level 3 measurement inputs because a quoted or observable price for the instrument or an identical instrument is not available in active markets. The earn-out liability is presented in non-current liabilities within the Unaudited Condensed Consolidated Statement of Financial Position to align with the expected timing of the underlying earn-out payments. The fair value of the earn-out is determined using a Monte Carlo simulation that incorporates a term of 4.48 years, the five earn-out tranches, and the probability of the Class A
9
Notes to the Unaudited Condensed Consolidated Financial Statements
(in thousands of U.S. dollars unless otherwise stated)
Shares in ListCo reaching certain daily volume weighted average prices during the earn-out period resulting in the issuance of each tranche of Class A Shares and Class B Shares in ListCo to the Former Parent. As of June 30, 2023, the fair value of the earn-out was determined to equal $365,575 by leveraging an implied volatility of 75 % and a risk-free rate of 4.18 %. The implied volatility represents the most significant unobservable input utilized in this Level 3 valuation technique. The calculated fair value would increase (decrease) if the implied volatility were higher (lower). Refer to Note 8 - Reverse recapitalization for more detail on the Former Parent’s earn-out rights.
Valuation methodology for the fair value of RSUs and PSUs granted to employees under the 2022 Omnibus Incentive Plan
The fair value of the RSUs granted April 3, 2023 was determined by reference to the Group’s closing share price of $3.79 on the business day immediately preceding the grant date (i.e., $3.79 per RSU). The fair value of PSUs granted was determined by calculating the weighted-average fair value of the 368,732 units linked to market-based vesting conditions and the 1,106,195 units linked to non-market-based vesting conditions. The units linked to non-market-based vesting conditions were fair valued by reference to the Group’s closing share price of $3.79 on the business day immediately preceding the grant date (i.e., $3.79 per unit). The units linked to market-based vesting conditions were fair valued using a Monte Carlo simulation in a risk-neutral option pricing framework whereby the future share prices of Polestar’s Class A Shares and shares of the peer group over the performance period were calculated assuming a GBM. For each simulation path, the payoff amount of the awards was calculated as the simulated price of the Class A Shares multiplied by the simulated total shareholder return vesting (i.e., the number of awards simulated to vest based on the probability of achievement of certain performance conditions) and then discounted to the grant date at the term-matched risk-free rate. The fair value per unit of the units linked to market-based vesting conditions was determined to be $3.33 by leveraging an implied volatility of 75 %, a peer group historical average volatility of 63.5 %, a risk-free rate of 3.8 %, a simulation term of 2.7 years, a dividend yield of 0 %, and 100,000 simulation iterations. As such, the weighted-average fair value per PSU was calculated to be $3.68 . Refer to Note 3 - Share-based payment for more detail on the 2022 Omnibus Incentive Plan.
Note 2 - Revenue
Polestar Group disaggregates revenue by major category based on the primary economic factors that may impact the nature, amount, timing, and uncertainty of revenue and cash flows from these customer contracts as seen in the table below:
| For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||
Sales of vehicles1 | |||||||||||||||||
| Sales of software and performance engineered kits | |||||||||||||||||
| Sales of carbon credits | |||||||||||||||||
| Vehicle leasing revenue | |||||||||||||||||
| Other revenue | |||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||
1 - Revenue related to sales of vehicles are inclusive of extended and connected services recognized over time.
For the three and six months ended June 30, 2023 and 2022, other revenue primarily consisted of license revenue generated from sales-based royalties received from Volvo Cars on sales of parts and accessories for Polestar vehicles and software performance upgrades.
The Group's largest customer that is not a related party accounted for $155,820 (23 %) and $271,246 (22 %) of revenue, respectively, for the three and six months ended June 30, 2023. For the three and six months ended June 30, 2022, no sole customer, that is not a related party, exceeded 10% of total revenue. Refer to Note 11 - Related party transactions for further details on revenues from related parties.
Contract liabilities
| Sales generated obligation | Deferred revenue - extended service | Deferred revenue - connected service | Deferred revenue - operating leases & other | Total | |||||||||||||
| Balance as of January 1, 2023 | |||||||||||||||||
| Provided for during the period | |||||||||||||||||
| Settled during the period | ( | ( | |||||||||||||||
| Released during the period | ( | ( | ( | ( | |||||||||||||
| Effect of foreign currency exchange rate differences | ( | ( | ( | ( | |||||||||||||
| Balance as of June 30, 2023 | $ | $ | $ | $ | $ | ||||||||||||
| of which current | |||||||||||||||||
| of which non-current | |||||||||||||||||
10
Notes to the Unaudited Condensed Consolidated Financial Statements
(in thousands of U.S. dollars unless otherwise stated)
Note 3 - Share-based payment
As noted in Note 1 - Significant accounting policies and judgements, Polestar granted shares to employees under the 2022 Omnibus Plan as part of the Group’s employee compensation. Under the 2022 Omnibus Plan, there are three kinds of programs: At-listing Plan, Post-listing Plan, and the Free Share Plan, all of which are equity-settled. For more details on the terms of each program, refer to Note 7 - Share-based payments in the Consolidated Financial Statements for Polestar Automotive Holding UK PLC, as of December 31, 2022 and 2021, and for the three years ended December 31, 2022 that were included in the Form 20-F filed with the SEC on April 14, 2023. The following table illustrates share activity for the six months ended June 30, 2023:
| Number of PSUs | Number of RSUs | Number of Free Shares | Total | |||||||||||
| Outstanding as of January 1, 2023 | ||||||||||||||
| Granted | ||||||||||||||
| Vested | ( | ( | ( | |||||||||||
| Forfeited | ( | ( | ( | |||||||||||
| Outstanding as of June 30, 2023 | ||||||||||||||
The following table illustrates total share-based compensation expense for the three and six months ended June 30, 2023 and 2022 by function:
| For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Selling, general and administrative expense | |||||||||||||||||
| Research and development expense | |||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||
Marketing consulting services agreement
On March 24, 2022, Polestar granted an equity-settled share-based payment in exchange for marketing services through November 1, 2023. Per the terms of the agreement, 250,000 Class A Shares vested on August 31, 2022. The remaining 250,000 Class A Shares vest over eight equal quarterly installments, with a final vesting date of November 1, 2023. The grant date fair value of the marketing consulting agreement was $5,308 which was determined using the market value of the shares listed on the Nasdaq. Of the 500,000 Class A Shares granted, 375,000 Class A Shares with a fair value of $4,946 were vested as of December 31, 2022. During the three months ended June 30, 2023, 31,250 Class A Shares vested, and the Group incurred a share-based compensation expense of $114 . During the six months ended June 30, 2023 62,500 Class A Shares vested, and the Group incurred a share-based compensation expense of $290 .
Note 4 - Leases
Polestar Group as Lessee
The following table depicts the changes in the Group’s right-of-use assets, which are included within Property, plant, and equipment:
Buildings and land | Machinery and equipment | Total | |||||||||
| Acquisition cost | |||||||||||
| Balance as of January 1, 2023 | |||||||||||
| Additions | |||||||||||
| Cancellations | ( | ( | |||||||||
| Effect of foreign currency exchange rate differences | ( | ( | ( | ||||||||
| Balance as of June 30, 2023 | $ | $ | $ | ||||||||
| Accumulated depreciation | |||||||||||
| Balance as of January 1, 2023 | ( | ( | ( | ||||||||
| Depreciation expense | ( | ( | ( | ||||||||
| Effect of foreign currency exchange rate differences | |||||||||||
| Balance as of June 30, 2023 | $ | ( | $ | ( | $ | ( | |||||
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| Carrying amount as of June 30, 2023 | $ | $ | $ | ||||||||
Amounts related to leases recognized in the Unaudited Condensed Consolidated Statement of Loss and Comprehensive Loss were as follows:
| For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Income from sub-leasing right-of-use assets | |||||||||||||||||
| Expense relating to short-term leases | |||||||||||||||||
| Expense relating to leases of low value assets | |||||||||||||||||
| Interest expense on leases | |||||||||||||||||
The current and non-current portion of the Group’s lease liabilities were as follows:
| As of June 30, 2023 | As of December 31, 2022 | |||||||
| Current lease liability | ||||||||
| Non-current lease liability | ||||||||
| Total | $ | $ | ||||||
Expected future lease payments to be made to satisfy the Group’s lease liabilities are as follows:
| As of June 30, 2023 | As of December 31, 2022 | |||||||
| Within 1 year | ||||||||
| Between 1 and 2 years | ||||||||
| Between 2 and 3 years | ||||||||
| Between 3 and 4 years | ||||||||
| Between 4 and 5 years | ||||||||
| Later than 5 years | ||||||||
| Total | $ | $ | ||||||
For the six months ended June 30, 2023 and 2022, total cash outflows for leases amounted to $11,436 and $6,124 , respectively.
Polestar Group as Lessor
As a lessor, revenue recognized from operating leases was as follows:
| For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Vehicle leasing revenue | $ | $ | $ | $ | |||||||||||||
For the majority of the Group’s operating lease contracts as a lessor, vehicles are paid for upfront by the customer at contract inception and repurchased by Polestar at the end of the lease term. The following table depicts the changes in the Group’s vehicles under operating leases:
| Vehicles under operating leases | |||||
| Acquisition cost | |||||
| Balance as of January 1, 2023 | |||||
| Reclassification from inventory | |||||
| Reclassification to inventory | ( | ||||
| Effect of foreign currency exchange rate differences | |||||
12
| Balance as of June 30, 2023 | $ | ||||
| Accumulated depreciation | |||||
| Balance as of January 1, 2023 | ( | ||||
| Depreciation expense | ( | ||||
| Reclassification to inventory | |||||
| Effect of foreign currency exchange rate differences | |||||
| Balance as of June 30, 2023 | $ | ( | |||
| Carrying amount as of June 30, 2023 | $ | ||||
Note 5 - Net loss per share
The following table presents the computation of basic and diluted net loss per share for the three and six months ended June 30, 2023 and 2022:
| For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Class A and B Shares | Class A and B Shares | ||||||||||||||||
| Net loss attributable to common shareholders | ( | ( | ( | ( | |||||||||||||
| Weighted-average number of common shares outstanding: | |||||||||||||||||
| Basic and diluted | |||||||||||||||||
| Net loss per share (in ones): | |||||||||||||||||
| Basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||
Loss per share for the six months ended June 30, 2022 is retrospectively adjusted to reflect the number of equivalent shares issued by the Parent to the Former Parent, based on the number of shares outstanding on the reporting date multiplied by the exchange ratio of 8.335 . For detail on the equity exchange ratio related to the merger with Gores Guggenheim, Inc. ("GGI"), refer to Note 20 - Equity in the Consolidated Financial Statements for Polestar Automotive Holding UK PLC, as of December 31, 2022, and for the three years ended December 31, 2022 that were included in the Form 20-F filed with the SEC on April 14, 2023. The following table presents shares that were not included in the calculation of diluted earnings per share as their effects would have been antidilutive for the three and six months ended June 30, 2023 and 2022:
| For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Earn-out Shares | |||||||||||||||||
| Class C-1 Shares | |||||||||||||||||
| Class C-2 Shares | |||||||||||||||||
| PSUs | |||||||||||||||||
| RSUs | |||||||||||||||||
| Marketing consulting services agreement | |||||||||||||||||
| Total antidilutive shares | |||||||||||||||||
Note 6 - Intangible assets and goodwill
The following table depicts the split between Polestar Group’s intangible assets, goodwill and trademarks:
| As of June 30, 2023 | As of December 31, 2022 | |||||||
| Intangible assets | ||||||||
| Goodwill and trademarks | ||||||||
| Total | $ | $ | ||||||
Intangible assets were as follows:
| Internally developed IP | Software | Acquired IP | Total | |||||||||||
13
| Acquisition cost | ||||||||||||||
| Balance as of January 1, 2023 | ||||||||||||||
Additions1 | ||||||||||||||
| Divestments and disposals | ( | ( | ||||||||||||
| Effect of foreign currency exchange rate differences | ( | ( | ( | ( | ||||||||||
| Balance as of June 30, 2023 | $ | $ | $ | $ | ||||||||||
| Accumulated amortization and impairment | ||||||||||||||
| Balance as of January 1, 2023 | ( | ( | ( | ( | ||||||||||
| Amortization expense | ( | ( | ( | ( | ||||||||||
| Divestments and disposals | ||||||||||||||
| Effect of foreign currency exchange rate differences | ||||||||||||||
| Balance as of June 30, 2023 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||
| Carrying amount as of June 30, 2023 | $ | $ | $ | $ | ||||||||||
1 – Of $175,218 in additions for the six months ended June 30, 2023, $53,132 has been settled in cash. These $53,132 are included in the $239,850 cash used for investing activities related to additions to intangible assets, and the remaining $186,718 relates to increases in Trade payables - related parties from prior years which were settled in cash during the six months ended June 30, 2023.
Additions to internally developed IP are primarily related to the Polestar 5 and various other internal programs, such as model year changes, for the six months ended June 30, 2023. Additions of acquired IP during the six months ended June 30, 2023 were primarily related to acquisition of the Polestar 2 and Polestar 3 IP from Volvo Cars. Polestar also acquired IP related to Polestar 4 from Geely. Refer to Note 11 - Related party transactions for further details.
Changes to the carrying amount of goodwill and trademarks during the period were as follows:
| Goodwill | Trademarks | Total | |||||||||
| Balance as of January 1, 2023 | |||||||||||
| Effect of foreign currency exchange rate differences | ( | ( | ( | ||||||||
| Balance as of June 30, 2023 | $ | $ | $ | ||||||||
Note 7 - Financial instruments
The following table shows the carrying amounts of financial assets and liabilities measured at fair value through profit and loss on a recurring basis:
| June 30, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||
| Assets measured at FVTPL | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||
| Other investments | |||||||||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Liabilities measured at FVTPL | |||||||||||||||||||||||||||||
| Earn-out rights | |||||||||||||||||||||||||||||
| Class C-1 Shares | |||||||||||||||||||||||||||||
| Class C-2 Shares | |||||||||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Note 8 - Reverse recapitalization
Polestar underwent a reverse recapitalization through the merger with GGI and related arrangements on June 23, 2022. For more detail on the reverse recapitalization, including the net assets of GGI assumed by the Group and the Class C Shares and Earn-out rights issued in connection with the merger that are accounted for as derivative liabilities in accordance with IAS 32, Financial Instruments: Presentation (“IAS 32”), and IFRS 9, Financial Instruments (“IFRS 9”), refer to Note 1 - Significant accounting policies and judgements and Note 16 - Reverse recapitalization in the Consolidated Financial Statements for Polestar Automotive Holding UK PLC, as of December 31, 2022 and 2021, and for the years ended December 31, 2022, that were included in the Form 20-F filed with the SEC on April 14, 2023.
Class C Shares
The Class C-2 Shares are not publicly traded and require a valuation approach leveraging Level 2 inputs. Refer to Note 1 - Significant accounting policies and judgements for further details on the valuation methodology utilized to determine the fair value of the Class C-2 Shares. On March 22, 2023, 4,500,000 Class C-2 Shares with a fair value of $3,285 were converted to 4,500,000 Class C-1 Shares with the same fair value following the election by the respective holders of the Class C-2 Shares and approval from the Board of Directors.
| As of June 30, 2023 | As of December 31, 2022 | ||||||||||||||||
14
| Liability Fair Value | Number Outstanding | Liability Fair Value | Number Outstanding | ||||||||||||||
| Class C-1 Shares | |||||||||||||||||
| Class C-2 Shares | |||||||||||||||||
| Total | |||||||||||||||||
| Class C-1 Shares | |||||
| As of January 1, 2023 | |||||
| Class C-2 Shares converted to Class C-1 Shares | |||||
| Changes in fair value measurement | ( | ||||
| As of June 30, 2023 | $ | ||||
| Class C-2 Shares | |||||
| As of January 1, 2023 | |||||
| Class C-2 Shares converted to Class C-1 Shares | ( | ||||
| Changes in fair value measurement | ( | ||||
| As of June 30, 2023 | $ | ||||
The fair value change for the Class C Shares was as follows:
| For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Fair value change - Class C-1 Shares | |||||||||||||||||
| Fair value change - Class C-2 Shares | |||||||||||||||||
| Fair value change - Class C Shares | $ | $ | $ | $ | |||||||||||||
Earn-out rights
Refer to Note 1 - Significant accounting policies and judgements for further details on the valuation methodology utilized to determine the fair value of the earn-out.
| Earn-out rights | |||||
| As of January 1, 2023 | |||||
| Changes in fair value measurement | ( | ||||
| As of June 30, 2023 | $ | ||||
The fair value change for the Earn-out rights was as follows:
| For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Fair value change - Earn-out rights | $ | $ | $ | $ | |||||||||||||
Note 9 - Equity
Changes in the Group's equity during the six months ended June 30, 2023 were as follows:
| Class A Shares | Class B Shares | Share capital | Other contributed capital | |||||||||||
| Balance as of January 1, 2023 | ( | ( | ||||||||||||
| Equity-settled share-based payment | ( | ( | ||||||||||||
| Balance as of June 30, 2023 | $ | ( | $ | ( | ||||||||||
The following instruments of the Parent were issued and outstanding in the form of American depositary shares as of June 30, 2023:
•467,914,248 Class A Shares with a par value of $0.01 , of which 221,357,712 were owned by related parties;
•1,642,233,575 Class B Shares with a par value of $0.01 , of which all were owned by related parties;
•20,499,965 Class C-1 Shares with a par value of $0.10 ;
15
•4,500,000 Class C-2 Shares with a par value of $0.10 ; and
•50,000 Redeemable Preferred Shares with a par value of GBP 1.00 .
As of June 30, 2023, there were an additional 4,532,085,752 Class A Shares and 135,133,164 Class B Shares with par values of $0.01 authorized for issuance. No additional Class C Shares or Redeemable Preferred Shares were authorized for issuance. Holders of Class A Shares in Parent are entitled to one vote per share and holders of Class B Shares in Parent are entitled to ten votes per share. Holders of Class C Shares in Parent are entitled to one vote per share for certain matters but have no voting rights with respect to general matters voted on by holders of Class A Shares and Class B Shares in Parent. Additionally, holders of GBP Redeemable Preferred Shares in Parent have no voting rights. Any dividends or other distributions paid by Parent shall be issued to holders of outstanding Class A Shares and Class B Shares in Parent. Holders of Class C Shares and GBP Redeemable Preferred Shares in Parent are not entitled to participate in any dividends or other distributions. Refer to Note 8 - Reverse recapitalization for additional information on the Class C Shares which are accounted for as derivative financial liabilities in accordance with IAS 32 and IFRS 9.
Note 10 - Liabilities to credit institutions
The carrying amount of Polestar Group’s liabilities to credit institutions as of June 30, 2023 and December 31, 2022 were as follows:
| Liabilities to credit institutions | As of June 30, 2023 | As of December 31, 2022 | ||||||
| Working capital loans from banks | ||||||||
| Floorplan facilities | ||||||||
| Sale-leaseback facilities | ||||||||
| Total | $ | $ | ||||||
The Group had the following working capital loans outstanding as of June 30, 2023:
| Currency | Term | Security | Interest | Nominal amount in respective currency (thousands) | Amount in USD (thousands) | ||||||||||||
| CNY | August 2022 - August 2023 | Unsecured | 12-month LPR1 plus | ||||||||||||||
| USD | August 2022 - August 2023 | Unsecured2 | 3-month LPR plus | ||||||||||||||
| USD | September 2022 - September 2023 | Unsecured2 | 3-month LPR plus | ||||||||||||||
| USD | September 2022 - September 2023 | Secured3 | |||||||||||||||
| USD | September 2022 - September 2023 | Unsecured2 | 3-month SOFR4 plus | ||||||||||||||
| USD | December 2022 - December 2023 | Unsecured2 | |||||||||||||||
| EUR | February 2023 - February 2024 | Secured5 | 3-month EURIBOR6 plus | ||||||||||||||
| USD | March 2023 - March 2024 | Unsecured2 | |||||||||||||||
| CNY | March 2023 - March 2024 | Unsecured2 | 12-month LPR plus | ||||||||||||||
| CNY | April 2023 - April 2024 | Unsecured2 | 12-month LPR plus | ||||||||||||||
| CNY | May 2023 - May 2024 | Unsecured2 | 12-month LPR plus | ||||||||||||||
| CNY | June 2023 - June 2024 | Unsecured2 | 12-month LPR plus | ||||||||||||||
| Total | $ | ||||||||||||||||
1 - People’s Bank of China (“PBOC”) Loan Prime Rate (“LPR").
2 - Letters of keep well from both Volvo Cars and Geely.
3 - Secured by Geely, including letters of keep well from both Volvo Cars and Geely.
4 - Secured Overnight Financing Rate (“SOFR”).
5 - New vehicle inventory purchased via this facility is pledged as security until repaid. This facility has a repayment period of 90 days and includes a covenant tied to the Group’s financial performance.
6 - Euro Interbank Offered Rate (“EURIBOR”).
Floorplan facilities
In the ordinary course of business, Polestar, on a market-by-market basis, enters into multiple low-value credit facilities with various financial service providers to fund operations related to vehicle sales. These facilities provide access to credit with the option to renew
16
as mutually determined by Polestar Group and the financial service provider. The facilities are partially secured by the underlying assets on a market-by-market basis. As of June 30, 2023 and December 31, 2022, the aggregate amounts outstanding under these arrangements were $73,103 and $33,615 , respectively.
The Group maintains one such facility with the related party Volvo Cars that is presented separately in Interest-bearing current liabilities - related parties within the Unaudited Condensed Consolidated Statement of Financial Position. Of the amounts above, the aggregate amounts outstanding as of June 30, 2023 and December 31, 2022 due to related parties were $29,283 and $16,690 , respectively. Refer to Note 11 - Related party transactions for further details.
Sale-leaseback facilities
Polestar has also entered into contracts to sell vehicles and then lease such vehicles back for a period of up to twelve months. At the end of the leaseback period, Polestar is obligated to repurchase the vehicles. Accordingly, the consideration received for these transactions was recorded as a financing transaction. As of June 30, 2023 and December 31, 2022, the aggregate amount outstanding under these arrangements was $16,766 and $11,719 , respectively.
Since the contracts identified above are short term with a duration of twelve months or less, the carrying amount of the contracts is deemed to be a reasonable approximation of their fair value. The Group’s risk management policies related to debt instruments are further detailed in Note 2 - Financial risk management of the Consolidated Financial Statements, as of December 31, 2022 and 2021, and for the three years ended December 31, 2022 that were included in the Form 20-F filed with the SEC on April 14, 2023. There are no changes in terms of risk management policies for the periods presented in these Unaudited Condensed Consolidated Financial Statements.
Note 11 - Related party transactions
For a detailed description of the Group’s related parties and related party transactions, refer to Note 25 - Related party transactions of the Consolidated Financial Statements, as of December 31, 2022 and 2021, and for the three years ended December 31, 2022, that were included in the Form 20-F filed with the SEC on April 14, 2023. There are no changes to the Group’s related parties for the periods presented in these Unaudited Condensed Consolidated Financial Statements. Related party activity during the six months ended June 30, 2023 and 2022 and balances as of June 30, 2023 and December 31, 2022 are presented below.
Financing
In May 2021, the Group entered into a working capital credit facility with Volvo Cars and subsequently drew down on the facility, which has a maturity of one year. As of June 30, 2023, $29,283 of this financing arrangement remained outstanding, which is included in Interest-bearing current liabilities - related parties on the Unaudited Condensed Consolidated Statement of Financial Position. Refer to Note 10 - Liabilities to credit institutions for further details.
Convertible Credit Facility with Volvo Cars
On November 3, 2022 the Group entered into a credit facility agreement with Volvo Cars for $800,000 , terminating in May 2024. The credit facility can be drawn upon once a month and is utilizable for general corporate purposes. Interest will be calculated at the floating six-month SOFR rate plus 4.9 % per annum. Prior to May 2024, if the Group announces an offering of shares with a proposed capital raise of at least $350,000 and no fewer than five institutional investors participate in the offering, Volvo Cars has the right to convert the principal amount of any outstanding loans into the same class of shares and at the same price per share as received by the participating institutional investors. Under IAS 32 and IFRS 9, Volvo Cars' conversion right meets the definition of an embedded derivative financial liability that is required to be bifurcated from the host debt instrument and accounted for separately because it could result in the issuance of a variable number of Class A Shares in the Parent at a price that was not fixed at the inception of the agreement. Additionally, the economics of Volvo Cars' conversion right are not clearly and closely related to that of the host debt instrument because the principal value of Volvo Cars' conversion right depends on whether or not the Group conducts a qualified equity offering to investors at a market discount. As such, the financial liability related to Volvo Cars' conversion right is carried at fair value with subsequent changes in fair value recognized in the Consolidated Statement of Loss and Comprehensive Loss at each reporting date. As of June 30, 2023, the Group had principal draws of $750,000 outstanding under the facility and the fair value of the financial liability related to Volvo Cars' conversion right was $0 .
Sale of goods, services and other
The total revenue recognized for each related party was as follows:
| For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Volvo Cars | |||||||||||||||||
| Volvofinans Bank AB | |||||||||||||||||
| Geely | |||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||
For the three months ended June 30, 2023 and 2022, revenue from related parties was $49,959 (7.29 %) and $39,558 (6.72 %) of total revenue, respectively. For the six months ended June 30, 2023 and 2022, revenue from related parties was $72,767 (5.91 %) and $83,567 (8.03 %) of total revenue, respectively.
Purchases of goods, services and other
17
| For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Volvo Cars | |||||||||||||||||
| Volvofinans Bank AB | |||||||||||||||||
| Geely | |||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||
Cost of R&D and intellectual property
Polestar Group entered into agreements with Volvo Cars and Geely regarding the development of technology leveraged in the development of the Polestar 2, Polestar 3, and Polestar 4. In 2020, the Group entered into similar agreements with Volvo Cars to acquire technology leveraged in the development of the Polestar 1, Polestar 2, and Polestar 3. The Group is in control of the developed product either through a license or through ownership of the IP and the recognized asset reflects the relevant proportion of Polestar Group’s interest. The recognized asset associated with these agreements as of June 30, 2023 was $1,175,284 , of which acquisitions attributable to 2023 were $125,411 . As of December 31, 2022, the recognized asset associated with these agreements was $1,144,240 , of which acquisitions attributable to 2022 were $218,031 .
Amounts due to related parties
Amounts due to related parties were as follows:
| Trade payables - related parties, accrued expenses, other current liabilities and interest-bearing current liabilities to related parties | As of June 30, 2023 | As of December 31, 2022 | ||||||
| Volvo Cars | ||||||||
| Geely | ||||||||
| Volvofinans Bank AB | ||||||||
| Total | $ | $ | ||||||
In addition to current liabilities to related parties, Polestar had non-current lease liabilities to related parties amounting to $35,041 as of June 30, 2023 and $27,123 as of December 31, 2022 included in Other non-current interest-bearing liabilities.
The Group’s interest expense from related party liabilities was as follows:
| For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Interest expense - related parties | $ | $ | $ | $ | |||||||||||||
Amounts due from related parties
Amounts due from related parties were as follows:
| Trade receivables - related parties and accrued income - related parties | As of June 30, 2023 | As of December 31, 2022 | ||||||||||||
| Volvo Cars | ||||||||||||||
| Geely | ||||||||||||||
| Volvofinans Bank AB | ||||||||||||||
| Total | $ | $ | ||||||||||||
Note 12 - Assets held for sale
In December 2022, the Group committed to a plan to sell, to a related party, the Chengdu manufacturing plant held by its subsidiary, Polestar New Energy Vehicle Co. Ltd., that was previously used to manufacture the Polestar 1 and special edition Polestar 2 BST 270. Accordingly, the Chengdu plant and certain related assets are presented as a disposal group held for sale. Polestar has initiated selling efforts and expects to close the sale by July 31, 2023. The assets related to the Chengdu Plant that have been classified as held for sale have a net value of $53,094 . The cumulative expense related to exchange rate differences from translation of the disposal group that are included in other comprehensive income amount to $4,260 . Prior to December 2022, the Group did not hold any assets classified as held for sale.
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| Property, plant and equipment | |||||
| Other current assets | |||||
| Assets held for sale | $ | ||||
Note 13 - Commitments and contingencies
Commitments
As of June 30, 2023, commitments to acquire PPE and intangible assets were $143,961 and $148,802 , respectively. As of December 31, 2022, commitments to acquire PPE and intangible assets were $179,690 and $216,572 , respectively. These commitments are contractual obligations to invest in PPE and intangible assets for the production of upcoming vehicle models Polestar 3 and Polestar 4. For the production of Polestar 3 and Polestar 2, contract manufacturing agreements are yet to be signed that define the upcoming investment commitments in Volvo Cars Charleston plant and Geely’s Chongqing plant respectively.
Contingencies
In the normal course of business, the Group is subject to contingencies related to legal proceedings and claims and assessments that cover a wide range of matters. Liabilities for such contingencies are recorded to the extent that it is probable the liability is incurred, and the amount is reasonably estimable. Associated legal costs related to such contingencies are expensed as incurred.
Note 14 - Subsequent events
Management has evaluated events subsequent to June 30, 2023 and through August 31, 2023, the date these Unaudited Condensed Consolidated Financial Statements were authorized for issuance by the Board of Directors. The following events which occurred subsequent to June 30, 2023 merited disclosure in these Unaudited Condensed Consolidated Financial Statements. Management determined that no adjustments were required to the figures presented as a result of these events.
On July 7, 2023, the Group drew down the remaining $50,000 of the $800,000 aggregate principal amount under its 18-month credit facility with Volvo Cars that was secured on November 3, 2022. Refer to Note 11 - Related party transactions for further details on the facility with Volvo Cars.
On August 1, 2023, the Group completed the sale of the Chengdu manufacturing plant held by its subsidiary, Polestar New Energy Vehicle Co. Ltd., to Zhejiang Geely Property Investment Holding Co. Ltd. The total consideration received from the sale of the plant was $71,043 .
On August 24, 2023, the Group entered into a 12-month working capital loan for $320,000 with a bank in China. This loans carries interest at the 12-month Secured Overnight Financing Rate plus 0.9 % and is secured by Geely. This loan benefits from letters of comfort from Volvo Cars and Geely.
On August 24, 2023, the Group entered into an unsecured 12-month working capital loan for $82,000 with a bank in China. This loans carries interest at the 12-month Secured Overnight Financing Rate plus 1.1 %. This loan benefits from letters of comfort from Volvo Cars and Geely.
On August 30, 2023, the Group entered into an unsecured 12-month working capital loan for $402,000 with a bank in China. This loans carries interest at the 3-month Secured Overnight Financing Rate plus 2.3 %. This loan benefits from letters of comfort from Volvo Cars and Geely.
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