Good day, and thank you for standing by. Welcome to the Polestar Fourth Quarter and Full Year 2025 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Anna Gavrilova. Please go ahead.

Thank you, operator. Hello, everyone. I'm Anna Gavrilova, Head of Investor Relations at Polestar. Thank you for joining this call covering Polestar's results for the fourth quarter and full year 2025. I'm joined by Michael Lohscheller, Polestar's CEO; and Jean-Francois Mady, Polestar's CFO, who will comment on the performance, and then we will open the floor to analysts' questions. Before we start, I would like to remind participants that many of our comments today will be considered forward-looking statements under the U.S. federal securities laws and are subject to numerous risks and uncertainties that may cause Polestar's actual results to differ materially from what has been communicated. These forward-looking statements include, but are not limited to, statements regarding the future financial performance of the company, production and delivery volumes, financial and operating results near-term outlook and medium-term targets, fundraising and funding requirements, macroeconomic and industry trends, company initiatives and other future events. Forward-looking statements made today are effective only as of today, and Polestar undertakes no option to update any of its forward-looking statements. For a discussion of some of the factors that could cause our actual results to differ, please review the risk factors contained in our SEC filings. In addition, management may make references to non-GAAP financial measures during the call. A discussion of why we use non-GAAP financial measures and a reconciliation to the most directly comparable GAAP measure can be found in the appendix of the press release and in the Form 6-K published today. Now I will hand over to Michael.

Hello, everyone, and thank you for joining us today as we present our full year 2025 results and provide an update on recent developments across the business. As you are all aware, world around us continues to throw up challenges, but we are making good progress, and we are focusing on delivering against our strategy. I want to update you on the most recent developments within technology, our financing situation and future model lineup expansion. But before that, a few words on the year that just passed. 2025 was a record year for Polestar in terms of retail sales. We delivered over 60,100 cars during the year, in line with our guidance of 30% to 35% growth and a new record for our young brands, an achievement to be proud of given the competition and market conditions. 2025 was also a year in which we took significant steps to adapt our commercial strategy and footprint. An important foundation for our future growth and journey towards profitability. We accelerated the expansion of our network of retailers by 50% from 140 to 210 retail sales points and have worked hard to improve our operational efficiency, whilst also preparing for the company's largest ever model offensive which we presented in February. During the fourth quarter, we made several announcements that reinforce our position as a technology leader in the EV segment. The upgraded model year '26 Polestar 3, which is being tested by the world's leading automotive media in the U.K. this week has received several upgrades, including an 800-volt architecture, this means our flagship SUV offers customers charging speeds of up to 350-kilowatt up to 500 kilowatts of power and 6% better efficiency. It also has an upgraded NVIDIA processor, taking its computing power from 30 to 254 trillion operations per second.…

Thank you, Michael. Good morning, good afternoon, everyone. 2025 was a year of record retail sale for Polestar, as Michael highlighted. And consequently, we achieved substantial revenue growth and a near breakeven adjusted gross profit. We also made meaningful progress on cost discipline and organizational efficiency. And we improved our capital structure profile and liquidity position. This performance was delivered despite a challenging market, exerting pressure on pricing and a geopolitical environment that led to higher tariffs and duties in 2025. Looking at the financial results for the full year 2025 and as preannounced, retail sale exceeded 60,000 cars. This represented an increase of 34% year-on-year in line with our growth target of 30% to 35%. The growth was driven by the continued transition to an active selling model and consequently, an accelerated retail sales network expansion, leveraging our attractive model lineup. Polestar 4 groups, best-selling model and it made up just over half of the volume. By geography, we saw particularly strong performances in Europe, led by the U.K., Germany, Belgium, and the Nordic region and in Asia Pacific with South Korea. Europe, including the Nordics, delivers 78% of our total volume. Throughout last year, our U.S. business was challenged by higher tariffs, regulation and policy changes. For example, changes in regulation meant that value of compliance credits used by company to offset lower efficiency fleet decrease. Furthermore, at the end of the third quarter, the tax credit for EV purchase expired. This market represented 7% of our retail sale, down from 14% in 2024. We operate in 28 countries worldwide, including 17 in our key regions of Europe. In cooperation with our partners, we opened 71 new sales points and sign up 54 new retailers in 2025. Most of this expansion was in Europe. Volume growth and our…

[Operator Instructions] We will now take the first question from the line of Andres Sheppard from Cantor Fitzgerald.

This is Anand on for Andres. Just to kick us off, maybe I was wondering how much of a headwind do you expect from tariffs and geopolitics given the significant manufacturing in China? And do you expect the plant in the U.S. and South Carolina to offset this a little bit? Can you give us some color there?

Yes. Thanks, Andres. So obviously, it's a time of uncertainty. That's fair to say, right? But I think the manufacturing footprint we set up is quite good because, obviously, as you know, we produce also in North America, also now in South Korea and in China, but there is uncertainty. And obviously, we'll make sure we try to balance this as best as we can. And that's also why then in the midterm, we want to localize more here in Europe, as we outlined, right? The Polestar 7 as a compact SUV car coming then into a European facility. But I think we do the right things. We have flexibility and that's also why we consolidated the Polestar 3 in Charleston, right, to have one manufacturing footprint for the Polestar 3, but it's fair to say it's a time of uncertainty.

Got you. I appreciate the color. And separately, with autonomy really becoming a significant theme in EVs. I was wondering if you could talk to us about how you view the space and maybe remind us of what your autonomy plans are with Polestar?

Yes. I mean that's an important topic for us because obviously, we stand for innovation. We have documented several times, right? We brought innovations early to our cars. For example, the Google build in was one element. But autonomous driving is an important topic. It will not come overnight in steps. And that's why, for example, the partnership with Mobileye but also the access to the Geely ecosystem is important. So obviously, we will go to Level 2, Level 2+ and then go step by step. But it's obvious a topic for the future because it makes life easier for consumers we see that, but it comes gradually. So not overnight and also not from Level 2 to Level 4, but it's something we are very focused on. And the good thing is that we have access to the technology through various partners, right? And it's a very dynamic field. And obviously, we also want to take a leading position there.

We will now take the next question from the line of Dan Levy from Barclays.

It's Josh on for Dan Levy. So I have one and then a follow-up. First question for you after the head count initiative last year. Can you just walk us through the latest cost initiatives and maybe the cadence of those?

Okay. So thanks, Dan, for the question. So indeed, we have achieved quite significant fixed cost reduction when it comes to head count in 2025. So we have decreased headcount by 25% which is a significant achievement. On top of that, we have optimized our marketing and communication spending. But I will say that we will continue as well to look at for more synergies moving forward. But when it comes to cost reduction, also, I just would like to stop a bit on the product cost reduction where we have achieved also some relevant results in '25 compared to '24%, especially on the Polestar 4 where we have reduced the product cost reduction by low double-digit level year-over-year, which is a great achievement, not only in material but also in battery. And of course, we don't want to stop here. We'll continue focusing on those product cost reductions through commercial negotiation, but also decontenting of our product while not compromising on the premium positioning. So I would say we are continuing marching. For us, it's very much important to improve, I would say, our cost, not only the product cost, but also our fixed costs. So we are well oriented entering 2026, but more to come on those two topics.

Great. And then just in terms of the latest outlook for monthly cash burn. Could you walk us through the puts and takes there and what we should keep in mind for this year and then going forward?

Yes. So in 2025, the level of cash burn is on average around USD 120 million per year. So I will say it's very similar to 2024. So one could say that we're not improving, but structurally, the cash burn is improving in a sense that we are improving our operating results. We have cut the losses when it comes to adjusted EBITDA by USD 300 million year-over-year, when you look at also the working capital, we have decreased significantly the level of inventory by around 7,000 new vehicle year-over-year. However, this positive impact has been compensated by higher activity when it comes to receivable due to the increase of volume, but also higher cash out when it comes to our payables due to 2024 payable entering 2025. Also, it is fair to recognize that when you look at the level of indebtedness, we have a heavy weight in terms of financial interest. And also looking at the cash out related to our investing activities, we still had in 2025, a tail of cash out related to legacy program. But entering 2026, so we are going to continue improving the operating results with all the actions that we have put in place with the improvement of the volume, sales mix but also offer action on the cost, as we just discussed, but also fair also to comment that due to the restructuring of our capital structure with the recent debt-to-equity conversion, the weight of financial interest in our operating cash flow will reduce. Same as well for the CapEx cash out during the last Strategy Day on the 18th of February we reiterate the fact that we wanted to move on the unique platform strategy, and we wanted to rely also on Geely Group technologies. And of course, that's going to help us, I will say, to reduce CapEx cash out moving forward. So we are confident that the cash burn in 2026 should improve versus 2025.

There are no further questions at this time. I would now like to turn the conference back to Michael Lohscheller, Polestar CEO, to conclude the call.

Yes. Thanks, everybody, for joining, and we'll be in touch as we will review the Q1 results in 3 weeks' time together. So I wish you a wonderful day and talk to you soon. Bye-bye.

This concludes today's conference call. Thank you for participating. You may now disconnect.