Good day, and thank you for standing by. Welcome to the Polestar Fourth Quarter and Full Year 2022 Results Conference Call. At this time, all participants are in listen only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone keypad. You will then hear an automatic message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Bojana Flint. Please go ahead.
Thank you, operator. Hello, everyone. My name is Bojana Flint from Polestar Investments. I will cover a few key points before handing over to Thomas Ingenlath, our CEO, and Johan Malmqvist, our CFO. Their remarks will take about 50 minutes. We'll then open the line for any questions followed by questions received from our shareholders. Before handing over the call to Thomas, I would like to remind participants that many of our comments today will be considered forward-looking statements under U.S. Federal Securities law and are subject to numerous risks and uncertainties that if fulfilled are actually what has been communicated. Forward-looking statements made today are effective only as of today. Polestar undertakes no obligation to update any of its forward-looking statements.
For a discussion of some of the factors that could cause our actual results to differ, please review the Risk Factors section of our report on Form 20-F or other documents we filed with the SEC. You may also find more information on forward-looking statements in our filings with the SEC or our investor update presentation and recent press releases, which can be found on our investor relations website. Further, we're hereby advising you not to place undue reliance on the preliminary estimated unaudited operational financial results for the year and quarter ending December 31st, 2022 that we are announcing today. Our independent registered accounting firm has not completed its audit of our year-end results.
The preliminary estimated unaudited information presented today could be subject to material adjustments. We should not be considered substitutes to the annual report on Form 20-F that we will be filing for the year ending December 31st, 2022. In addition, management will make reference to non-GAAP financial measures during the call. Our discussion of why we use non-GAAP financial measures and information regarding the conciliation of our non-GAAP financial measures that are mostly directly comparable GAAP measures is available in our earnings press release as well as in the investor update presentation issued earlier today. With that, I'd like to turn the call over to Thomas. Please go ahead.
Thank you, Bojana, and thank you to everyone who has joined our results call. When I reflect on the outcome of 2022 and what lies ahead, I'm confident we have the right strategy of capturing the market opportunity with our established global presence and the rapid product rollout. With more than 5 years as CEO, I know that our focus on design, technology, and sustainability is what resonates with the market and makes customers passionate about our brand. This underpins the role we play in the much needed shift to sustainable mobility. Now, the recent achievement. I want to underline how delighted I am with everything we achieved in 22. It was our biggest year yet, despite the fluid and challenging environment. There are many highlights of 2022 to mention. Most importantly, we delivered what we said we would.
More than 50,000 vehicles globally, up 80%, year-over-year. Today, there are around 100,000 Polestars on the roads in 27 markets. There are 158 retail locations and over 1,100 points where our customers can get service. Only one other pure EV player in mass-market production has this kind of global footprint. Thanks to the huge team effort, over 21,000 vehicles were delivered in the fourth quarter. Our record quarter to date helped us surpass the 50,000 order target. This was an important milestone which demonstrated the abilities and strengths, and I would like to thank everyone at Polestar that made this happen. We grew our revenues to $2.5 billion, up over 80%. Together with support from our major shareholders, we strengthened our liquidity so that we can remain laser-focused on business execution.
A business execution that first and foremost prioritizes and safeguards our rapidly expanding premium product portfolio despite prolonged macro and ongoing supply chain constraints. Starting with design and our product development. We launched our first luxury SUV, Polestar 3, in October 2022 in Copenhagen, and we were extremely pleased with the reception that it received, including order intake to date. Polestar 3 is a powerful design-led electric performance SUV that appeals to the senses with a distinct shape and excellent driving dynamics. It is a car that has been designed as a Polestar from start to finish and built for the electric age. We are working closely with our manufacturing partners now to start the production in the middle of this year.
Once the production in China commences, the team will move to Charleston, South Carolina, looking to start U.S. manufacturing on Polestar 3 in mid-2024. Keep an eye out this spring. We will host some exciting Polestar 3 events in the U.S., meeting customers, investors, and media. In January, we launched a major update of Polestar 2, a new high-tech front end that reflects the design language premiered by Polestar 3, the SmartZone. Polestar 2 also gets substantial sustainability and performance increases with a battery upgrade and new, more powerful and at the same time, more efficient motors. For the first time in a Polestar, rear-wheel drive is Polestar 2. In short, we showed our continued love for Polestar 2 by keeping it fresh and exciting alongside launching new vehicles.
We are doing both as we believe this is very important in keeping customer connected with our brand and satisfaction high. Focus on customer satisfaction has been a critical factor that has ensured Polestar 2 is today amongst the top 10 best-selling EVs in many markets, including the U.K., Sweden, Norway, Canada, South Korea, and Australia. As I promised, I'm happy to confirm Polestar 4 is in the starting blocks. We can't wait to show it to you, and we will very, very soon. Moving to innovation, another key pillar for Polestar. We recently reached an agreement with Google for our vehicles to benefit from their latest enhancements, such as the new HVC on Polestar 3 and the rollout of remote actions for Polestar 2. We are expanding our partnership with Luminar from Polestar 3 to include their Lidar technology also in Polestar 5.
The utilization of lidar technology continues to gain momentum as a global focus on next-generation safety and autonomy increases. Worth mentioning, Polestar 3 with Lidar is available since February to order at polestar.com. Sustainability underpins everything we do. Our ambitious sustainability project, Polestar 0, continues to build momentum. In the last few weeks, we added further eight new partners, bringing the total of 24 overall. We are making strong strides towards our goal of creating a truly climate neutral car by 2030. We initiated the pathway report in response to the climate crisis and in collaboration with another EV maker. We believe collective actions to reduce greenhouse gas emissions in the supply chain and increase renewable energy in the grids are needed in addition to the faster EV adoption. To sum it up, I'm extremely excited for 2023.
This year, we will fundamentally build on all our achievements from 2022 and despite the still uncertain and fluid operating environment, plan to deliver 80,000 cars, 60%, more than last year. Polestar in the coming months will meaningfully transform from a one-model company to having a line-up of three cars in our portfolio. Free from legacy constraints and backed up by the scalable asset-light model, we will capture more of the market growth opportunities while always keeping true to our core pillars of design, innovation, and sustainability. I would like to ask Johan to comment on our financial results and give some guidance on 2023 outlook.
Thank you, Thomas. Hello, everyone, thank you for taking the time to join us today. It's great to see so many of you on the call and on the webcast. Starting with operational highlights first. We have delivered 51,491 cars globally in 2022, of which 21,067 in the fourth quarter, our record quarter to date. Just to stop and reflect on that for a moment, delivering over 21,000 cars in the quarter is a fantastic achievement for a young company. As Thomas mentioned, it is an important milestone which demonstrates both our abilities and strengths, our ability to ramp up production, our ability to meet the logistical challenges of handing over the keys to over 21,000 customers across the globe in one quarter, and the strength of our brand and product.
Most importantly, it demonstrates that we have the capability to execute in a fluid and still challenging environment. We are now active in 27 markets on 4 continents and have 158 sales locations and over 1,100 service points. We grew these by 40%-50%, complementing our digital-first direct-to-consumer approach with our expanding physical equipment. We also recognize that it is still a challenging macro environment. As I shared on the last earnings call, we started to take actions already last year. I'm pleased to see that those initiatives have come through in the numbers, especially in our operating expenses. I am proud of what we have accomplished through the tremendous hard work and dedication of our entire organization. Moving to the financial highlights for full year 2022.
Revenue increased 84%, from $1.3 billion to $2.5 billion, mainly driven by an increase in Polestar 2 vehicle sales, with continued commercial expansion across both existing and new markets. We mainly sold long-range dual motor variants of the Polestar 2 in 2021. While in 2022, we introduced other variants to offer choice to our customers, some at lower price points, which had an impact on average revenue per vehicle. With regards to market mix, our sales in 2022 were proportionately higher outside of Europe, where revenue per car is typically lower. In terms of foreign exchange, this was due to strengthened U.S. dollar versus predominantly European currencies. Gross profit increased from $1 million to $119 million, leading to an improved gross margin of 4.9%.
This was driven by higher Polestar 2 sales and lower fixed manufacturing costs. In the latter part of the year, price increases. Partially offset by foreign exchange, which led to higher cost of sales and product and market mix. Selling, General and Administrative expenses were 21%, higher at $865 million, compared to 84%, growth in revenues as we start to accrue benefits of scale. Research and development expenses were down 27%, to $171 million due to the absence of Polestar 1 amortization, partially offset by higher spend on future vehicles and technologies. Operating loss, excluding the one-time share-based listing charge of $372 million, decreased 8%, from $995 million to $914 million. Moving on to Q4 2022, I would like to point out four items.
Revenues in the quarter were nearly $1 billion as we delivered 21,000 cars. A great achievement. Gross margin was 6.3%, better than expected as the full effect of the price increases introduced early in the year came through in the quarter, but input costs are still lagging and only had a meaningful impact in December. Thirdly, Selling, General and Administrative expenses were kept flat compared to the same period last year due to the active cost management that I mentioned earlier. Finally, together, these resulted in a reduced operating loss of $205 million, down 39%, when compared to Q4 2021. Moving on to cash flow.
Cash used for operating activities for the full year was $1.1 billion, mainly driven by operating loss, working capital increase in inventories and trade receivables as a result of higher production and sales, and interest expenses due to increased financial indebtedness. Cash used for investing activities was $0.7 billion, predominantly driven by intellectual property investments for Polestar 2, Polestar 3, and Polestar 4. CapEx in Q4 was lower than expected, but largely due to timings. Cash provided by financing activities was $2.1 billion, driven by the net listing proceeds of $1.4 billion and a net increase in short-term borrowing of $0.7 billion to support the continued growth of the company. At the end of 2022, cash and cash equivalents stood at approximately $1 billion.
Before I hand over to the operator, let me wrap up with the outlook for 2023. Global volume is expected to be approximately 80,000 cars, an increase of 60% year-over-year, predominantly driven by Polestar 2 sales. We expect gross margin to be broadly in line with 2022, with volume and product mix supporting margin progression later in the year. Finally, we are on track in terms of liquidity, and as we previously communicated, we continue to explore potential equity and debt offerings to raise additional capital to fund.
Thank you. As a reminder, if you wish to ask a question, you can press star one one on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. This will take a few moments. We're going to take our first question.
The first question comes to line of Winnie Dong from Deutsche Bank. Your line is open. Please ask your question.
Hi. Thank you so much for taking my questions. Can you guys hear me okay? Hello? We can. Okay, great. On your 2023 delivery targets, you know, you exited 2021 with pretty strong sort of cadence in the Q4 quarter. Any reason why we might not think your, you know, ADK guidance is a conservative number? You know, should we be expecting a sequential step down in Q1 and improving throughout the year? That's my first question. Thank you. I have a follow-up.
Yeah. Thomas here, Winnie. Well, I think it's a well-known effect in the market that quarter one after quarter four is always that little dip that then picks up in spring again, a very natural behavior. The overall guidance on 80,000 as a target for 2023, I think it's just simply us being very realistic about what we feel is doable in a world which is, you know, struggling with wars, still recovering from the effects from the pandemic. Yes, of course, we have a much better situation when it comes to the supply chain and logistics again. The 80,000 is an increase of +60%.
I think that's definitely something which we feel is a strong growth from where we ended in 2022 with 50,000. Not to forget the big bulk of the 80,000 is the Polestar 2, which will have the very nice, great upgrade and tech. The effect of us expanding our product portfolio very meaningfully now with adding start with now the Polestar 3, but as well the Polestar 4 already in sight. That effect will of course be much stronger and really to full effect in 2024.
Maybe just to follow on with just a brief statement about the phasing for the year.
As Thomas mentioned, just the natural seasonality of the business, the volumes tend to be lower at the beginning of the year. We expect volumes to be weighted towards the second half. This is on the back of the recently launched Polestar 2 model year 2024, as well as then with some of the Polestar 3 volumes expected to come in later in the year.
Winnie, do you have further questions?
I'm sorry, I was on mute. Thanks for that. Well, that was helpful. Can you expand more on the growth margin trajectory for the year? You know, you alluded to, you know, a similar level versus 2022. Could you maybe provide sort of like a year-over-year comparison and a breakdown of factors that are driving that in terms of perhaps, you know, bits of impact from pricing regional mix and in product mix as well? Thanks so much.
Yeah. No, absolutely. I can provide a little bit more color on the growth margins for this year. As we guided in the release, we expect growth margins to be broadly in line with 2022. With that being said, we do anticipate some pressure on margins during the first half of the year with the run rate impact of the raw material prices coming through, as well as some increased sales support in select markets. We then expect margins to improve later in the year as the volumes pick up and we start to see the impact of the model year 2024 coming through, and as I mentioned, first deliveries of Polestar 3.
It's also worth mentioning that we have not assumed any reductions in the material costs during the year, which of course would be margin accretive, depending on timing.
Okay, great. Thanks so much.
Thank you. Now we're going to take our next question. The next question comes to line of Tobias Beith from Redburn. Your line is open. Please ask your question.
Hi. Good afternoon. Thanks for taking my question. I got a couple. I guess where I'd like to start is on raw materials. What are your expectations for the impact of raw material on other cost inflation on earnings in 2023? I guess what I'm looking for is, you know, a figure in the $ hundreds of millions, if that's okay. I've got a couple of follow-ups. Thanks.
That's a tough sense question to answer, Tobias, in regards to providing guidance there. What I can say is what I stated in the sense that for Q4, whilst we saw the full impact of the price increase introduced early in the year, there's still a lag and a longer lag than originally anticipated on the increased input costs. We really only saw that have and it come through in December.
With that in mind then, as I mentioned, we do expect some margin pressure during the first half of the year, because of then the full run rate impact of raw materials coming through and then, later in the year, the margin then to improve.
Okay, great. Just to make sure I understand, in the fourth quarter, basically the margin improved because your raw material price inflation didn't increase or you didn't experience any inflation like you thought you would, you're gonna start to realize some of these increases in the first half of the year, they get offset in the second half of the year. Is that right?
That's right. That's correct.
Okay, great. Just my second question is, if I have a look at your regional websites, it looks like the order book for the Polestar 2 in the U.S. covers less than 1 month of sales versus 8 in Europe and roughly 3 in China. What sort of actions are you taking to increase brand awareness in North America and China, given how important it is to success of the Polestar 3? I was also wondering if you are willing to share how your 2023 volume guide splits by major region.
Generally, the order book that we went or left 2022 into 2023 is a good order book, and we still are busy with working that down. In regards of the activities that we have for the markets, in U.S., we are very much actually start yesterday promoting that Polestar 2 does qualify for the incentives, when leased. That is a program that we very much promote now, and I think that will strengthen the Polestar 2 position in the market very much.
Generally, the brand awareness in the U.S. is something that will along our buildup of the Polestar 3 introduction into the market, us going now in April with the car on tour, the car coming to the spaces in the middle of the year. That is all orchestrated to be a nice buildup of a buzz around the car and the brand in the U.S. That's very opposite to the 2022, where we started with this big bang, of being in a halftime show in the Super Bowl. This year, is much more targeted to the build-up towards the middle of the year. That maybe is very important to keep in mind when you judge now on Polestar in the U.S.
Maybe just to then address the regional mix to give some color there. If we look at full year 2022, the U.S. accounted for a little bit short of a quarter of the sales. Then, as you know, the predominantly the sales are in Europe, probably two-thirds, with the remaining then the rest of the world or Asia-Pacific. I would expect a similar mix for 2023, perhaps with a slightly higher portion of the sales in APAC.
Okay, great. This is super helpful. Thank you very much. I'll pass the line on to someone else.
Thank you.
Thank you. Now we're going to take our next question. The next question comes to line of Dan Levy from Barclays. Your line is open. Please ask your question.
Hi, good morning or good afternoon to you. Thank you for taking the question. wanted to start by asking, I know you talked about growth earlier, but maybe you can talk about the underlying trends in OpEx and what we might be able to expect for 2023 on the OpEx side.
Dan.
Dan, apologize, the line broke up. Would you mind repeating the question? We had a hard time hearing it.
yeah. OpEx, looking for underlying trends in OpEx in 2023. The gross margin guide, but what are you looking at on the OpEx front?
Okay, I heard the first part of your question. You're looking for guidance in regards to OpEx. What I can say there is that we continue to apply a restrictive spend in light of the prolonged challenging macro environment. With that being said, we also need to consider our expanded footprint and the fact that we are now established in 27 global markets. Coupled with that, we plan to dial up the marketing spend in preparation for the upcoming two car models, Polestar 3, and then ultimately Polestar 4. All in all, I would expect the SG&A spend to increase year-on-year, I would say by similar percentage increase as you saw for 2022.
Great. Thank you. Second question is, I think earlier you made, in the Q&A, you made a comment about sales support. Maybe you could just explain what that means. Also just the pricing trend as it relates to Polestar 2. One of your competitors, a large, pure play EV co, you know, made some headlines by cutting prices earlier in the year. Maybe you can talk about how the potential for price decreases actually factors into your thinking.
Yeah, maybe I can start with the first part. It's, what I meant there is really also relates to the fact again that, you know, we're now established in eight additional markets. Of course, we need to get ourselves established there just as we have in the other ones in investing in the brand and our presence. That's what I was referring to there.
Yeah. Thomas here again. Regarding the pricing and the position. I think it's very it's a very good moment in time now where it becomes very obvious the different ideas where the companies are going strategy. The other pure EV player you were mentioning is obviously very much concentrating to go mass market in the future to compete with, yeah, the likes of Volkswagen and Toyota. Polestar's ambition is, of course, to go fully into this premium luxury sports car segment. We have talked about that already. Yes, of course, Polestar 2 compares to a Model 3. With cars coming, Polestar 3, 4, and 5, it's very clearly targeted towards a product portfolio, a competition that's much more in the comparison to an electrified Porsche.
For that reason, we are keen on developing desirable cars that offer great tech and design, and of course, they have their price. Polestar 2 upgrade that we are introducing now into the market is a very good example for that. We upgraded the car not just only with a nice new front end. It's really tech that we brought in. There is range improvement with stronger, powerful engines. This value creation is well for the customer for them to have a stable, reliable value with this car. I think that is our premium strategy that we are determined to follow through.
Thank you. If I could just squeeze one more in, please. I see your press release makes note that you are exploring potential equity or debt offerings to raise additional capital. If you could just remind us of the minimum cash balance required, and you know, what types of options you might have to gain additional liquidity. You know, I know you just raised the facility with Volvo and Geely. What other sort of creative financing opportunities might there be beyond straight equity or debt? Thank you.
Sure. Let me just address kinda broadly what you were talking about, and then I can talk a little bit more specifically. Okay. As you mentioned, as we previously announced, and towards the end of last year, we obtained this $1.6 billion shareholder financing and liquidity support from our two major shareholders. This has definitely helped strengthen our financial position. As you would have noticed as well, we had approximately $1 billion of cash on the balance sheet at year-end. We, of course, continue to explore other funding options. I think we've demonstrated that through the course of 2022, in the form of local working capital facilities. We also have a trade financing facility in place. Those are two examples.
We continue to explore, avenues and funding sourcing such as those. In addition to that, we also recognize that we do need to bring in and raise, additional capital, either in the form of debt, continued debt, either from the capital markets or equity or a combination of both. That is something that we continue to explore.
The minimum cash balance?
Yeah, we don't necessarily guide on the minimum cash balance. I mean, we had $1 billion at the end of 2022. We don't necessarily need to hold that amount of cash on hand as we stand right now. That of course helps our financial position going into 2023. What we also mentioned before was based upon this liquidity support from our shareholders alongside the cash on the balance sheet and other potential financing solutions, then we expect to be adequately funded through 2023.
Okay, thank you.
Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star 11 on your telephone keypad. Dear speakers, I don't know for the questions. Oh, please accept my apologies. We just got another question over the phone lines. The next question comes to line of Tobias Beith from Redburn. Your line is open. Please ask your question. Excuse me, Tobias, your line is open. You're more welcome to ask the question.
Oh, sorry. Hi. I had myself on mute. Thanks for squeezing me in again. If I remember rightly, in the second quarter of 2023, $220 million worth of payables due to Volvo Cars. I was just wondering, can you explain, kind of, I guess how you expect this to be covered? You know, is this going to be, going to come from the liquidity support from TSD? I guess broadly, what I'm actually interested in is kind of the working capital trend for 2023. Thank you.
Okay. Thank you for that question. In regards to working capital, we expect foreign capital to grow with sales. As you correctly point out, we still have scheduled payments of the overdue related part of payables towards Volvo that you make reference to. Those we are planning to settle them during the year. The settlement of those payables around the half a billion that you mentioned, that is part of the cash forecasting for the year. That's contemplated in the prior statement where we expect to be adequately funded through 2023.
Okay, great. Thanks.
You're welcome.
Thank you. Dear speakers, there are no further questions over the audio lines, I would now like to hand the conference over to management team for any written questions.
Yeah. Hi, Thomas here again. We have selected six of the top voted questions that reached us, and I will try now to answer them in the time that we have left here. Let's have a look at question number one. It's being said that Polestar is not known, a brand, a known brand in the U.S. What are the efforts being taken to improve this? To start with, I would love to explain a bit the difference that we obviously have compared to some of our competitors, peers in the startup arena. Obviously, our strategy was from day one to go out and develop our footprint quite harmoniously in all the regions, major important regions for EV.
Instead of what a lot of competitors do, develop in your home country a strong presence, and then after those years of establishing that, going out and go and conquer more of the world. We can discuss, you know, what is more benefit. Our clear dedication was to do it the Polestar way, and that is when I mentioned that the Polestar 2 is amongst the top 10 best in many markets. That is a result of it, because, yes, that's why we are in South Korea, that's why we're in the UK, in Sweden. In many countries, Australia, we are under the top 10 with our Polestar 2. You can compare that. I mean, to grow one plant very fast, yeah, you can do that, but it's a very isolated one.
I mean, now the botanical plant, sorry, not factories. But if you plant a lot of flowers and then they grow, of course, a big amount, but it grows a little slower. If you in the U.S. don't see our brand as much as you see competitors like Lucid, Rivian. Yes, I understand that that might be slightly irritating. You will see our brand, therefore in many, many other countries where you never, ever have seen a Rivian or Lucid. Having said that, of course, we want to accelerate and progress in the U.S. As mentioned a bit earlier, there's a full-fledged program over the course of the next 12 months, how we increase our brand awareness in the U.S., how we put obviously money behind it.
There's 4 quarter to this year, over $20 million allocated to work in the U.S. and build up brand awareness. I mentioned before, it is not the big bang in the beginning with the Super Bowl. It is indeed more targeted towards going now with the Polestar 3 into the market and promote it. Indeed, there's a little bit more of a build up towards summer. The Polestar 3 arriving, the phase of the Polestar 2 being promoted, all of that will of course heavily increase the awareness for Polestar. Last but not least, of course, we expect as well a lot the fact that we are moving production of Polestar 3 into the Charleston plant in the U.S.
It will of course make as well a big, big impact on our products and our brand are present in the U.S. market. Finally, yes, today we have growth. We have 30 spaces up and running in the U.S. and we will of course continuously expand, another 10 over the course of the year, Washington D.C., Miami on the agenda, some of them coming. I think all in all, it will definitely be towards, in over the course of this year, again, another big step that Polestar will make in the U.S. Question number 2, found as well a lot of people who asked in that direction: can you share any details on Polestar's long-term plans for expanding its product line?
We will fundamentally transform from being a one-model company to a company with a lineup of Polestar 2, Polestar 3, and indeed, Polestar 4 joining as well. 2024, the Polestar company will have these three cars fully in the lineup, Polestar 2, 3, and 4. I presume everybody knows that we are already with prototypes up and running with Polestar 5, preparing already for the next launch end of 2024, so that the Polestar 5 will be then fully available in the world in 2025. As a cherry on top of that cake, the Polestar 6 Roadster, a car that will then complete that first round of product portfolio in 2026.
This is to give you an perspective, kind of the bandwidth of where we see the brand Polestar in this first generation operating. We will, and that is again, in probably in sharp contrast to other EV startups. We have, of course, very strong focus on not letting our product portfolio get old. We will start looking into the second generation of the cars that we have put out there. Not necessarily exactly the same as a repetition but really working on keeping this customer base that we have built there and grow together with them. Number three: will Polestar utilize Volvo dealerships for displaying, selling and servicing Polestar vehicles? Well, we utilize the Volvo dealership, of course, heavily when it comes to servicing. How could we ever have done that roll-up of 1,100 service centers?
This is of course, working together and using Volvo Cars facilities and dealers. The Polestar spaces that we run and operate in most parts of the world are direct consumer places where Polestar is selling these cars, but they're operated and invested by Polestar space investors who indeed we recruited, who we invited Volvo dealers to invest into this new form of Polestar space. They have this special contrast, of course, they bring the expertise and all the knowledge of how to work with customers in a good way. We harvest a lot on that expertise and have a very good business model together with them. In the U.S., North America, it's a bit different.
There we work together with selected Volvo dealers to then invest into a Polestar space where they sell the car. It is in the beginning, been done very deliberately where the EV market was blossoming. As we expand in the U.S. and as of course electrification expands in the U.S., we will with more and more Volvo dealers do contracts to run Polestar spaces. That definitely is on the agenda to continue that very successful model that we have established in the first 3 years. Do you think a new factory in the Carolina will help Polestar to ramp up production and increase market share within North America, especially since consumers may associate the brand with China? Yeah, absolutely.
I mean, Carolina should be a big factor in making sure people understand, Polestar is a European brand, but with a global production footprint. Carolina is the first step. We will definitely have other steps following where we bring production into a more global spread. The capability of ramping up production absolutely relies on using facilities that are available in the group. We have this asset-light model where we, for example, the factory in Carolina, of course, we're not building that factory. We're bringing our product into an factory which is up and running and established, and that is the way how we will continue using this model. Next question is: does the company have plans to offer more of an entry-level model similar to Tesla Model 3?
Polestar 2 defines very much the base and the entry level for the brand Polestar. No, we don't have any intention to launch and develop a model below Polestar 2. Very clearly, We are not aiming to produce 10 or even 20 million cars per year. That's very clearly not the target of the brand Polestar. For that reason, no, that is a very different ambition within our company. We will move our product portfolio upmarket and explore that end. The U.S. tax credit of seven and a half thousand dollars was a major incentive to buy Polestar. That's now the next question, number six. Does Polestar have plans to begin qualifying for the tax credits in the future? Does Polestar 3...
The Polestar 3 is priced above the tax credit threshold, and the Polestar 2 is not currently manufactured in the U.S. Well, Polestar 2 currently qualifies for the $7,500 federal tax credit in the U.S. When leased, and we have already adjusted our commercial plans for this and went to market yesterday with a competitive lease offering. Polestar 3 at launch will not. We will deliver Polestar 3 in a very heavily equipped, luxurious specification, hence the higher MSRP. At this time we are pleased with the order intake and do not see the need to lower the price, which would of course have an effect on our margin.
In the future, we could offer an entry variant of the vehicle which would then meet the tracks-threshold, but that is then, a discussion and, something that we look upon in the future.
Thank you, Thomas. Hi, everyone. Bojana here. I would just like to apologize. I believe we had some technical issues during the opening remarks. There was some interference on the sound. We will post the recording very soon on our website and make sure that those interferences are taken out. I can only apologize for that. We will obviously improve going forward. With that, I will just pass to Thomas for his closing remarks and thank you again for joining us.
Yes. Well, from my side, a big thank you for the interest and you joining. You have heard 2022 was a great year. Really, again, you can imagine we had actually a really, really massive end of the year party because to celebrate that year. Looking forward, 2023, we have a fundamentally upgraded Polestar 2 that year. We will start producing Polestar 3, and indeed we will launch Polestar 4 in 2023. The shift from being a one-car company to having a product portfolio of three models that address the core EV growth segments will help us to achieve the targets. Thanks a lot.
That does conclude our conference for today. Thank you for participating. You may now all disconnect. Have a nice day.