Polestar cuts 15% of its global workforce, Geely Auto's multi-brand globalization strategy faces challenges

Swedish electric car maker Polestar said recently that due to "challenging market conditions", the company will cut 450 jobs worldwide, accounting for about 15% of the company's total workforce.

For some consumers, they may not be familiar with the Polestar brand. In fact, if you look back, it has a direct connection with the Volvo and Geely we are familiar with.

Polestar was originally a high-performance sub-brand of Volvo. In 2017, it officially became an independent electric high-performance car brand. It is headquartered in Sweden, its R&D center is in the UK, and its production base is in China. Its models are sold to the global market.

In June 2022, Polestar landed on Nasdaq. After listing, Polestar has been seeking new funds from its major shareholders Volvo and Geely, with the goal of doubling its production in the next two years. It is worth mentioning that as the two largest shareholders of Polestar, Volvo and Geely hold a total of 88% of Polestar's shares and more than 93% of the voting rights.

Yet Polestar, like many other electric vehicle makers, has run into trouble amid weak economic conditions.

As a brand that Geely attaches great importance to, Polestar's layoffs may highlight a problem of Geely, that is, its multi-brand development strategy may be at a disadvantage.

Multi-brand strategy is one of Geely's core competitive advantages. The company owns more than a dozen brands including Geely, Volvo, Lynk & Co, Zeekr and Polestar. These brands have their own characteristics and positioning to meet the diverse needs of consumers.

For example, Geely mainly targets the mid- and low-end markets, focusing on cost-effectiveness and practicality; Volvo is positioned as a luxury brand, emphasizing quality and safety; Lynk & Co targets young consumers, focusing on individuality and technology; Zeekr has a place in the electric vehicle field; and Polestar is a high-end new energy vehicle brand.

Geely hopes that this multi-brand strategy will bring it economies of scale and systemic advantages, thereby enriching its product line while enabling it to better resist risks.

In the past two years, Geely and its other brands have achieved good results in terms of local brands. In 2023, the cumulative sales of the Geely brand were close to 1.31 million vehicles, a year-on-year increase of more than 16%.

As for foreign brands, Volvo, an important acquisition target of Geely, sold more than 708,000 vehicles in 2023, setting a historical record, an increase of 15% year-on-year. Among them, sales in Greater China also exceeded 180,000 vehicles, also breaking the historical record.

On the other hand, Polestar's sales in 2023 will be about 54,600 vehicles. Although it also achieved growth, the increase was smaller, only 6%. In addition, Polestar adjusted its sales target in 2023. At the beginning of the year, the company set its sales target at 80,000 vehicles. However, in November, the high-end electric vehicle manufacturer said that its sales target would be lowered to 60,000 vehicles.

Then, Polestar's final sales in 2023 were only 54,600 vehicles, not even reaching the lowered target. In addition, Polestar's performance in the Chinese market has been unsatisfactory. In the fourth quarter of 2023, Polestar delivered approximately 12,800 vehicles worldwide, while in the Chinese market, the company only delivered 880 Polestar 4s.

Perhaps it is difficult to talk about its performance in the Chinese market, Polestar has not announced specific sales data for 2023. In the seven-year development history of Polestar, the company has replaced six CEOs in China, but these executives have still failed to reverse the company's performance in the Chinese market.

So far, Polestar has released three models, namely Polestar 1 (discontinued), Polestar 2 and Polestar 4. Among them, only Polestar 4 has made some waves in the Chinese market, and the other two are mainly for overseas markets. The company said that it will start delivering Polestar 3 this year, but the model will also be mainly for the North American and European markets in the early stage of its release.

Polestar, backed by Volvo and Geely, has failed to make any achievements in China, the world's largest automobile market. Perhaps this shows that Geely does not have the ability or energy to give sufficient support to the brand. Polestar seems to have been forgotten by Geely, at least in the Chinese market, its presence is indeed not high.

91che believes that in the Chinese electric vehicle market, which is full of strong competitors, if Polestar still hopes to reverse its decline, in addition to constantly replacing its CEO, it may need more strategic attention and product help from Geely.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.