Shares of Polestar Automotive Holding UK PLC (PSNY) plummeted 7.05% in pre-market trading on Wednesday after the electric vehicle maker reported a significant widening of its quarterly loss and a substantial impairment charge.

The company's Q2 net loss ballooned to $1.03 billion, compared to a loss of $268 million in the same period last year. This steep increase was primarily attributed to a non-cash impairment expense of $739 million related to the Polestar 3 model. Despite the widening loss, Polestar's revenue showed improvement, rising to $791 million from $579 million a year earlier.

Investors were particularly concerned about Polestar's negative gross margin of 97.2% for the quarter, reflecting significant challenges in the company's cost structure. The company's cash position stood at $719 million at the end of the quarter, raising questions about its financial stability. Looking ahead, Polestar maintained its target of 30-35% compound annual retail sales volume growth over 2025-2027, but also noted it was assessing the impact of international tariffs, policy and regulatory changes, and evolving market dynamics. The company also mentioned it was seeking further cooperation, especially with Volvo Cars, possibly in an effort to improve its operational efficiency and financial position.