Swedish electric carmaker Polestar is steering its business in a new direction with the announcement of two major developments: the launch of the Polestar 7 and a redesigned Polestar 2. These updates reflect the company’s ambition to carve a stronger presence in the competitive electric SUV market while addressing challenges in its sales and operations.
Polestar 7: Targeting the Compact SUV Market
Polestar’s upcoming Polestar 7 marks its entry into the premium compact SUV category. Designed to take on established players like the Porsche Macan and BMW iX1, the Polestar 7 is expected to appeal to customers seeking a stylish, performance-driven EV in a smaller SUV package. While technical details are still under wraps, the SUV will likely share some DNA with Volvo’s EX30 and EX40, given both brands are under the Geely Group umbrella.
Philipp Römers, Polestar’s head of design, shared the company’s excitement about the model, saying: “Polestar is known for its progressive design, with each car standing out and creating its own buzz – so too will Polestar 7” . The model will be built in Europe, with analysts speculating that production will align with Polestar’s aim to optimize costs and processes.
The Polestar 7 is expected to arrive around 2027. With a growing demand for electric SUVs, the company hopes this model will play a significant role in attracting new buyers and reinforcing its reputation for design-led innovation.
Polestar 2 Redesign: Evolution of a Core Model
The Polestar 2, a liftback that has been a cornerstone of the company’s lineup, is set to get a makeover before the end of the decade. This update will see the Polestar 2 transition into a small SUV that will slot into the market as part of the Polestar 7 lineup. The redesign reflects a broader strategy to move all Polestar models onto a single platform, a shift the company says will cut complexity and lower costs.
CEO Michael Lohscheller acknowledged the importance of the Polestar 2’s role in the brand’s growth so far. “We are building on the strong Polestar brand with design and performance at its core,” he commented. “But significant changes are needed to make this well-respected progressive brand a successful and viable business”
The redesigned Polestar 2 (right).
Challenges and Opportunities
The announcements come at a time when Polestar is navigating a mixed set of challenges. In 2024, the company reported a 15% drop in sales compared to the previous year, with 44,851 units sold. However, Polestar is optimistic that upcoming launches, such as the Polestar 3 and 4 in 2025, will help reverse the decline.
The company is also expanding its retail footprint, particularly in North America, where the number of Polestar stores is expected to grow from 36 to 57 by the end of 2027. Many of these will be located within existing Volvo dealerships, aligning with the brand’s strategy to capitalize on shared resources .
Polestar is targeting an ambitious 30–35% annual retail sales growth between 2025 and 2027. The goal is to turn a profit after 2027, with the company also exploring new revenue streams like selling carbon credits.
Lohscheller’s optimism is clear: “We expect 2025 to be the strongest year in Polestar’s history.”
Expanding Production and Market Reach
Polestar’s manufacturing footprint already includes facilities in the U.S., South Korea, and China, and the Polestar 7 will add a European site to the mix. The company also plans to enter France, one of Europe’s largest and fastest-growing EV markets, in 2025, with further expansion into Eastern Europe, Asia, and Latin America slated for 2026.
Diversifying Revenue Streams
In addition to its vehicle sales, Polestar is leaning into revenue opportunities from carbon credits. The company expects this segment to contribute significantly, potentially reaching hundreds of millions of dollars annually by 2025. Polestar has already established a European CO2 credit pool with four other manufacturers.
Enhanced Customer Experience
Polestar is also boosting convenience for its customers with improved access to charging networks. In Europe, Polestar drivers can use over 850,000 charging points, including Tesla Superchargers. In North America, they have access to 17,800 Tesla Superchargers using a NACS adaptor.
Additionally, the new Polestar Energy service aims to make home charging more efficient and affordable. Customers could save up to 30% on charging costs while supporting the grid. This service, paired with the launch of bidirectional charging capabilities, is set to roll out in several markets later this year.
What This Means for the UAE and Saudi Arabia
Although the Middle East hasn’t been a focal point in Polestar’s latest announcements, the region presents significant potential for growth. With governments in the UAE and Saudi Arabia actively promoting electric mobility and sustainability, Polestar’s premium EVs could find a strong customer base here.
The Road Ahead
Polestar’s latest moves demonstrate a clear focus on expanding its SUV offerings and simplifying its operations. The Polestar 7 and the revamped Polestar 2 are part of this strategy, and the company hopes these models will not only attract more customers but also bring it closer to profitability.
While the Polestar 7 isn’t expected until 2027, the company’s broader plan suggests a busy few years ahead. With an expanding lineup, new retail spaces, and a push to streamline its platform, Polestar is positioning itself to stay competitive in the growing EV market.
Polestar’s success will depend on how well these changes resonate with customers, but it’s clear the brand is determined to make its mark in the electric SUV space.
