On Thursday, Piper Sandler adjusted its stance on Polestar (NASDAQ:PSNY) Automotive Holding UK Plc (NASDAQ:PSNY), shifting from an Overweight to a Neutral rating. The firm also revised its share price target for the electric vehicle (EV) maker, bringing it down to $2.00 from the previous $3.00.
The revision reflects concerns about the company's positioning amidst aggressive EV price reductions and potential regulatory changes in Europe.
The automotive analyst cited Polestar's attractive vehicle designs, specifically highlighting the Polestar 4 model. Still, the recent trend of price cuts within the EV sector has raised concerns about the sustainability of Polestar's higher price points. The competitive landscape has become increasingly challenging due to manufacturers reducing EV prices to attract more consumers.
Adding to the company's challenges, there are indications from European regulators of a possible tariff on imported Chinese electric vehicles. This tariff would be a response to state subsidies that give Chinese manufacturers an unfair advantage. Although Polestar is a Swedish brand, its parent company, Geely, is Chinese, and currently, all Polestar vehicles are manufactured in China.
The analyst pointed out that while Polestar might be in a better position to shift production compared to its Chinese counterparts, such a move would be complex and time-consuming. This potential relocation of manufacturing facilities could jeopardize the company's financial targets for 2025.
The firm's analysis suggests that Polestar's current strategy and operations could be at risk if these regulatory and market pressures materialize.
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