Polestar 4 at the Hangzhou Bay factory
Polestar (NASDAQ: PSNY) announced on March 7 that all trim models of the Polestar 4 ranging from 299,000 to 399,000 RMB will be reduced by 60,000 RMB for a limited time, alongside a buyback option valued at 25,000 RMB. A buyback option guarantees that the customer can sell the vehicle back to Polestar at a predetermined price within a given timeframe.
The 60,000 RMB reduction is structured with a 5,000 RMB required deposit to unlock 35,000 RMB in discount and the final payment will be further reduced by 30,000 RMB. This effectively brings down the entry-level single-motor Polestar 4 price from 299,000 RMB to 239,900 RMB, but the offer is limited to 100 vehicles purchased between March 1-31.
Moreover, this promotion offers complimentary upgrades valued at 35,000 RMB for the smart driving package, as well as limited-time half-price specials on the Nappa seat upgrade package and on the high-performance package.
Why is Polestar discounting its SUV?
First, this is unlike recent discounts from Li Auto or NIO, who offered discounts on old models in view of facelift launches. Polestar has not announced a model facelift and has already reduced the starting price of the Polestar 4 from 349,800 RMB to 299,000 RMB in November 2023 by removing out the benefit package.
Polestar may be testing the water without fully committing to the price war as Geely's own ZEEKR 001 and 007 are well below the 300,000 RMB starting price mark with more advanced technological configurations in China. However, such a steep discount may leave an anchor effect on future prospective buyers; no one wants to feel cheated by as much as 60,000 RMB. We will likely know whether Geely decides to drastically reduce the Polestar 4 once again to better compete in the mass market in China, as few consumers are willing to pay a premium for handling performance, which is Polestar's main competitive advantage.
Polestar 4 China sales are behind its sedan sibling
As of March 3, 2024, Polestar has sold 503 vehicles, 276 of which are the Polestar 4. Before this month's limited discounts, both the Polestar 2 and 4 started slightly below 300k RMB. However, sales of the SUV have fallen behind its sedan sibling by a ratio of nearly 2:1.
After the Volvo split, Geely set high expectations for Polestar, aiming to break even in 2025 with 155,000-165,000 unit sales. To achieve this target, Polestar China sales will need to do much better than in previous years. In January 2024, Polestar sold 204 vehicles, far better than the 67 units sold in Jan. 2023. As of March 3, Polestar already broke past the 500 unit sales mark, a sharp contrast to last year, during which cumulative sales were only 125 as of February 28, 2023. Despite softness in last few weeks of Polestar 4 sales, Polestar's cumulative China sales have far exceeded previous year's.