Polestar Automotive Holding UK PLC (PSNY) Q1 2023 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to the Polestar Q1 2023 Results Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I will now like to hand the conference over to our speaker today, Bojana Flint, please go ahead.

Thank you, operator. Hello, everyone. My name is Bojana Flint from Polestar Investor Relations. Thank you for joining our Q1 2023 results call. Before handing over to Thomas Ingenlath our CEO, and Johan Malmqvist, our CFO for their opening remarks, followed by analysts and shareholder questions, I will handle some housekeeping points. I would like to remind participants of the many of our comments today will be considered forward-looking statements under the U.S. securities laws and are subject to numerous risks and uncertainties that may cause Polestar's actual results to differ materially from what has been communicated. These forward-looking statements include but are not limited to statements regarding the future financial performance of the company, production and delivery volumes, financial and operating results outlook and guidance, macroeconomic industry trends, company initiatives and other future events. Forward-looking statements made today are effective only as of today and Polestar undertakes no obligation to update any of the forward-looking statements. For a discussion of some of the factors that could cause our actual results to differ, please review the risk factor section of the annual report on Form 20-F filed with the SEC. In addition, management will make references to non-GAAP financial measures during this call. A discussion of why we use non-GAAP financial measures and information regarding reconciliation of our non-GAAP financial measures, with the most directly comparable GAAP measures is an investor update presentation issued earlier today. With that, I like to turn the call over to Thomas, please go ahead.

Thank you, Bojana. The first quarter was a good example of the team's hard work and commitment. We have achieved record first quarter deliveries of 12,076 cars up 26% year-on-year, and end as the second quarter of this year with good commercial momentum. I would like to spend a few moments reflecting on what has enabled this. The main things that set Polestar apart as a brand. As the first quarter shows, we are in the middle of a period of strong growth, creating footprint across 27 markets that allows us to adapt our commercial operations to match supply and demand across the world. This is complemented by our stable production base with over 130,000 cars manufactured to date. We also have a well-balanced mix between retail and fleet customers. Our global partnership with Hertz to supply 65,000 cars is working well and with the significant numbers out there, this provides a fantastic opportunity for potential customers to experience our costs. Reflecting how we are maturing as a business, we are starting to see our first repeat customers. This is a significant step for our young brand like us, as it reduces our reliance on only winning new customers. It also provides the foundation for our pre-owned business, creating another entry point for new customers. Recently, we introduced significant upgrades to Polestar 2. And I'm happy to say that it remains one of the top selling bets in many markets across Europe, North America and Asia. The reason they launched the BST 230 special edition also pushes the boundaries of performance and has been very well received. Polestar 3, our design-led electric performance SUV had its debut in North America recently where it generated very strong interest. We successfully unveiled Polestar 4, the latest example of our design and performance capability a few weeks ago. We launched it in China and expect to start production in the fourth quarter. But we also received major interest around the world. And we plan to start deliveries in other markets from mid-2024. In addition to design and innovation, sustainability is what the Polestar brand represents. It is our focus across all parts of the business, and we reduced our relative CO2 emissions per car sold by 8% in 2023, decoupling our emissions from sales growth. This is a foundation that we will continue to build Polestar's premium luxury brand on. We are totally committed to this ambition and as such belief that price stability is important to our customers. Now, as you might have seen, Volvo cars announced early today that they need additional time to complete the software development for the new all-electric platform, which is also the basis for our Polestar 3. This means that startup production in Chengdu China is now expected in early 2024. Importantly, the start of manufacturing Polestar Charleston, U.S.A., is still on track for mid-2024. And the adjustments to Polestar 3 does not impact Polestar 4, as they are based on different platforms. We also acknowledge the tougher economic outlook for the automotive industry. And due to both of these reasons, we have adjusted our '23 global volume expectations through a range of 60,000 to 70,000 vehicles, representing an annual growth rate of 16% to 36%, following record deliveries of 51,491 cars last year. We have actively managed our cost base since mid-2022, but we need to do more. And that's why we are intensifying our efforts including putting in place a group wide hiring freeze and reducing our headcount by 10%. We're doing this in a structured way across all our markets, while safeguarding our programs. These necessary actions will benefit our cost basis here, and more so in 2024. Now, I would like to ask Johan to comment on our financials.

Thank you, Thomas. Hello, everyone. And thank you for joining us today. It's great to see so many of you again on the call and on the webcast. During the first quarter of 2023, we have delivered 12,076 cars globally, up 26% year-on-year, reflecting strong volume development in key markets such as the U.S., Canada and the UK. We have entered the second quarter with a well-established global presence in 27 markets on four continents, and with over 140 sales locations and nearly 1,120 service points. Before moving on to quarterly financial highlights and to echo Thomas's points, I want to emphasize that we, the management are extremely focused on positioning Polestar prudently in order to tackle the near term challenges. Arising from later than anticipated Polestar 3 starup production and a tougher economic outlook faced by the automotive industry. We will deploy marketing and sales support activities in order to continue to build as well as protect our brand value and to maintain a growth momentum. This will be compensated with intensified cost management efforts we are announcing today. As a reminder, and you have heard us say this before, we recognize the challenging macro environment we have and continue to operate in and we started to take actions more than six months ago. We are pleased to see that those initiatives started to come through in the numbers especially in our operating expenses. However, this is not enough and hence we are taking further steps to strengthen Polestar in the near term and reduce the cost base by taking out around 800 rolls that were planned to be added this year, taking us back to the 2022 base of around 3,000 employees. We are undertaking a wide range of additional actions, while at the same time safeguarding the development of Polestar 5 and Polestar 6. Moving to the financial highlights for the first quarter of 2023. Revenue increased 21% from $452 million to $546 million driven by higher Polestar 2 sales across major geographic markets and price increases on model year '23. Despite the price increases, revenue per vehicle decreased slightly primarily due to a negative translation currency effect, as well as the negative channel and mix effect. Gross Profit increased from a negative $7 million to a positive $18 million and a gross margin up 3.4%, reflecting the model year 2023 price increases established in the second half of 2022 alongside a positive foreign currency transaction effect. This was partially offset by higher freight and input costs. Selling, general and administrative expenses were down 11% at $189 million due to active cost management. Research and Development expenses were up 11% or $4 million with continued product development for future vehicles and technologies. Operating loss decreased by nearly $60 million or 23%, predominantly driven by the higher gross profit and active cost management. Moving on to cash flow, cash used by operating activities for the first quarter of 2023 was $283 million, mainly driven by operating loss, higher levels of inventory and trade payables payments. Cash used for investing activities was $131 million, primarily as a result of Polestar 3 and Polestar 4 intellectual property investments. Cash provided by financing activities was $323 million, reflecting short term borrowings of $637 million, of which $300 million was drawn down from the Volvo cars shareholder loan facility, partially offset by principal repayments of $311 million. At the end of the first quarter of 2023. Cash and cash equivalents stood at $884 million. With continued support from our two major shareholders, we're closely monitoring the market and exploring potential equity and debt offerings to fund operations and business growth. Thank you again for joining. And over to the operator for live Q&A by the analysts. And then we will answer the top questions from shareholders.

Thank you. [Operator Instructions] We will now take the first question. It's from the line of Steven Fox from Fox Advisors. Please go ahead.

Hi, good morning. Thanks for taking my question. First off, I was wondering if you could dissect the change in in your vehicle forecast for the year a little bit further. I'm trying to understand how much you would relate to the macro? And then further, can you talk about pricing strategies for the rest of the year given what's going on in the market in general and your prior strategies and then I have follow-up?

So maybe I start?

Yes.

Okay. Hi, Steve. So the -- as we mentioned in the introduction, the lower volumes compared to the previous guidance is a reflection of the combination of both the later than originally anticipated deliveries of the Polestar 3 and the tougher market conditions. Now, we haven't disclosed the breakdown, what we can say is that given the tougher economic climate, it's difficult for us to compensate for the absence of the Polestar 3 volumes with incremental Polestar 2 volumes. That coupled with higher market uncertainty is what led us to call down the volumes and provide a range.

And in terms of pricing?

We have -- in the course of the next week, the model year '24 starting of Polestar 2. And as we explained before the upgrade of tech the significant feature increase and the better performance of this car in terms of range, we combine that with increase of price with the Polestar 2 of this model year. This is again supported with our statement that of course we see as well that our customers expect on one hand stability in our pricing and for that reason, we will proceed persists. Obviously, again linking this to our volume corridor. I mean, one of the reasons why we are prudent and giving this corridor because we indeed intend not to push pass into the market for any price just to achieve a volume that we once announced, but indeed, gives us the opportunity to maintain the right balance between the volume that we achieve and what we achieve in terms of margins and price stability with our products.

Great, that's really helpful. And then I was just curious, like, when we think about the 27 countries you're in, there seems a lot that you can control in terms of branding and sales efficiencies. What is sort of the difference between an Africa region where you're operating well, versus one that's new? And how you bring that up? What's the potential in terms of just improving sales through better sales metrics in some of the lower performing regions today?

Well, if you have a closer look at the regional breakdown of our sales. I think it's pretty -- it's pretty good example of what advantages it is to have this, I call it now widespread of 27 markets. Because indeed, there are it's one thing that in a new established market, of course, needs some time to develop its full potential. The other effect is that of course, there are regional facilities happening in quarters, like incentives cuts in the country, which of course naturally have a damping there in the interest of the customer for a moment. But if you have a broad base, you can indeed compensate. And for that reason, for example, of course, in the Scandinavian in the Nordic countries with quite a lot of them having incentive going away in this quarter. Compensating that was exceptionally good sales in the UK for example. Of course, that is indeed a very good effect of being that widespread.

Great, that's all very helpful color. I appreciate it. Thank you.

Thank you.

Thank you. We will now take the next question, it's from the line of Winnie Dong from Deutsche Bank. Please go ahead.

Thanks so much for taking my questions. I appreciate that you're not breaking down the reasons for the reduced guidance between, the push out of Polestar 3 and in the macro challenges. But maybe can you talk about the order trends that you've been observing any sort of specific strengths by region or weakness by region that'd be appreciate it? That's my first question. Thanks.

Yeah, we left '22 obviously with a very strong order book. And with indeed, still have a solid order book that we are, that we're working down, let's face it spring -- it brings customers to bring cost to customers in order for them not waiting too long for them. And obviously, that model year '24 will be an additional push for the Polestar 2 sales and the campaign waiting to rollout now when the cars in production. For that reason we have good conviction in the potential to achieve our sales of Polestar 2. Having said that again, obviously the macroeconomics and our ambition to maintain the pricing and the premium position of this car and not enter into the price war. Of course, for that reason, we have this prudent outlook. And I mentioned a bit about differences in reasons in beginning. Obviously, there are effects in the beginning of this year in Nordic countries where you see, people that knowing that the incentives in the beginning would not be in place anymore, obviously push their sales in December 2022, which of course helped us in '22 December a lot. But for that reason, of course, the first quarter was weaker there and for normalization, we expect this to become to normalize in the Nordic countries. We have as well started, of course, much more explaining and pushing the fact that the purchase of Polestar 2 in 2023 in the U.S. via a lease program qualifies for incentives. And for that reason, we see as well, the pickup of interest and order for the Polestar 2 in the U.S. again, after obviously the slowdown that we had in the end of '22 when the car for I call it now a short moment, didn't qualify for the incentives. So that's another effect, which of course makes us positive about the outlook for the Polestar 2 orders.

Thanks, that's all very helpful. My follow up is on the cost management side, the global freeze and the 10% headcount reduction that you just announced today. Can you maybe elaborate more on timing and what parts of the business are managing that for you? And then maybe any more quantifiable annualized thing only or is it as a result of reduction? Thank you.

Yep, thanks Winnie. So, as we've communicated, we're implementing a 10% headcount reduction. And that's often an existing base of around 3,300 employees. So this would then put us at 3,000 employees, which is the same level we ended last year. And that we would then intend to keep through this year. So we're working through the specifics of the headcount reduction. As it relates to the three hundreds, you can expect to see those cost savings start coming through the SG&A during the second half of this year, and then with the full bond rate effect next year. If you take into account the reduction of the additional 500 planned headcount for the year, then of course, those costs are even higher.

Any sort of quantifiable savings rate that we can think about.

We're still working through the specifics of that, Winnie. But of course, you can use the 300 a proxy against those 310 -- 300 reduction in headcount versus the actual numbers. I should also mention that we're also working on additional initiatives to drive out cost, and to conserve cash in the company, such as trimming the development costs of certain car programs, efficiency gains with our commercial operations, where for example, we've seen improvements in the quality levels of the Polestar 2 leading to lower warranty repairs. And a little bit what we touched upon before in regards to our 27 markets, simply improving the efficiencies there, and how we operate it now that we're becoming more established. So those are examples of additional actions across the company that we're taking.

Got it. That's very helpful. Thank you so much.

You're welcome.

Thank you. We will now take the next question. It's from the line of Tobias Beith from Redburn. Please go ahead.

Hi, good afternoon. Thanks for taking my questions. I was just wondering if we could return back to audit intake. And if I have to look at your balance sheet, advanced payments from customers declined sequentially, again this time from $41 million now to $33 million, suggesting that gross new orders in the period may have been less than 12,000 units, which I guess if I annualized is 12,000 units less than the bottom end of your guided corridor. Any further comment on how orders have trended year-to-date and perhaps maybe what you're doing to stimulate new orders through the year. And I have two follow-ups if that's okay.

Well, isn't that an indication just simply that we as well just simply able to deliver faster to our customers? I mean, the audiobook has always two sides to it. Strong audible yes, as nice as it is it means as well that customers of course, especially in the last year had to wait quite long for the delivery. This normalizing is as well, what you read in these numbers that this indeed is shrinking bits for the customer might be a very very good effect. So for that reason don't interpret this number now over into interest going down. That's where, again, order intake is something that is across the regions varying and generally in the first quarter in the automotive industry is generally off course as well less intense than you would have it in the second half of the year. And that trend this year, we exactly see again happening. But of course, the fatigueness in January-February is something that is with spring, picking up and yeah, this effect we will see in '23. Again,

And Tobias just on your phasing, don't forget, as we communicated before, we do expect volumes to be weighted more towards the second half. And that's the case, even with the absence of the Polestar 3. And part of that reason is also done on the back of the Polestar 2 model year '24, which we then anticipate will drive a higher growth.

Okay, cool. Thank you. And my second question relates to the Polestar 4. And the Indicative price, that you announced that the Shanghai Auto Show of $60,000, given prior comparisons to the Porsche Macan was a little lower than I'd anticipated. Do you still think that the comparison between Polestar and Porsche makes sense? Or do you think investors should now think of Polestar is attempting to disrupt BMW or Mercedes Benz?

You referring with a 60,000, and thinking it's a bit slow? I mean, it's -- you look at a, the company, that was our direct sales business model has a very, very clear pricing here, where you don't go into our shop and go leave it was a good deal. I mean, that kind of having a list price that don't material doesn't materialize. It's not that much comparable. So I think you have to put that a little bit into the equation as well, if you compare this. For 60,000, again, it's the car that probably does not have the performance spec and certain addition on it. So you easily can spec up this car. Having said that, if you look at the comparison, it's very helpful for us to give that guidance for people to understand that the Polestar 4 does not directly compete with a Tesla Model Y, which, where you would immediately say, but isn't that car a little bit too expensive to compete with it? It is indeed much, much closer in its price range to Porsche Macan than it is to Tesla Model Y. And I think it is very important for us to give that guidance where to put this car into position. I mean, we have our own brand, we are not out there to build the Porsche Macan copy. We are putting our product there, which is in a way something new. And again, that's where it is helpful for us to give a little bit of that positioning in order for people not mistaking it as a Tesla Model Y competitor.

Okay, thank you. And just a quick point of clarification, is the $60,000 price point, your top-end variance, so I guess the equivalent of the dual motor large pack Polestar 2, and future variants may be cheaper, or should we think of it the Polestar 4 is having more expensive variants being announced in the future?

In the presentation at Auto Shanghai, we actually were why it -- I call it now explicit about the price range that the Polestar 4 will cover very, very early in this time already. And indeed, there was a price range for the Polestar 4 make sure, between $60,000 and $80,000. And I think that is --that's where you pick the 60 now, very rarely exclusively, I mean of similar price point. So when you see that we actually, let me try to remember it was I think, RMB350,000 to RMB540,000, you have to translate that into dollars, and then you get the price range, which obviously is much broader than just as $60,000 that you mentioned.

Okay, I'll look at the presentation. I must have missed that. Thank you for the answers. I'll pass the line.

Thank you. We will now take the next question, it's from the line of the Dan Levy from Barclays. Please go ahead.

Hi. Good afternoon to you. Thanks for taking the questions. Wanted to go back to just the pace of quarterly volume. And maybe you could give us a sense in the first quarter, if the 12,000 units of deliveries, was that a function of demand or was that just a function of the output at I think [Indiscernible] from the facility. And with the guidance that you're providing, the step up in volume, is that just more so a function of output increasing, or was that just a function of sort of seasonality, more demand coming online?

If you're unhappy, then if I think it was a mix of both. Because indeed, in the very beginning of this year, we were indeed as well lacking the stock, having sold lots of cars in the last quarter of '22. So a certain degree of not being able to deliver more cars was as well, because we didn't have that many cars in stock there. This is of course, normalizing and not the case anymore. Because funnily enough in this call for the first time, we have not talked about supply chain issues, which I think is amazing. Because indeed, the supply chain issues indeed not a topic that much this year. So yeah, this obviously will for the rest of the not be the issue. Seasonality, indeed, you mentioned it that, again, is an effect on the country, you would always in quarter one and probably in quarter two, still have less automotive business happening then in the past and in quarter three and four. So indeed that will be exactly the same in '23 again.

Yeah, I can only echo what Thomas said is that a little bit of a tight supply going into this year. So a combination of the two Dan. But on a go forward basis, the production is we don't expect to be an impediment. It's going to be the more demand driven, as I said, with volumes increasing and weighted towards the second half again, also as we start them, delivery of the model year '24.

Got it. Okay. So you passed the supply constraint, and it's more function of demand. Thank you. Second, wanted to ask about the go back to the pricing strategy. And I appreciate your comments about focusing on -- your customers are looking for price stability, but maybe you can talk to how you think the macro plays into your pricing strategy, if that all?

Well, the macro definitely plays in that. For example, the model mix, of course, customers are more price-sensitive and would probably think twice if they add another package to it. So generally, the average of what price we sell the Polestar 2 yes, that of course has -- that has an influence that people are in the environment more careful in spending money. Of course, we had an influence from that side.

And you saw an element of that than in the average selling price for Q1. Actually, that even though on the one hand, it reflected the benefits of the prior price increases. Actually, it was overshadowed by a negative translation effect. But there also was a small element of negative variant mixed effect to Thomas's point. So I think that's one example of that macro conditions.

Great, thanks. If I could just squeeze one more in, please. I know you mentioned that Polestar 4 is on a different platform than Polestar 3. And so that's why it's not going to be delayed. But maybe you could just remind us of maybe what pieces of software are shared or aren't shared between the two. And just the confidence that you have that Polestar 4 is still going to be on track for SOP before the end of the year?

Yeah, the customer facing side of, I call it now the Entertainment Software is indeed shared. Because the Android-based Google system is part of Polestar 3 and Polestar 4 for the customer. That's indeed is one experience. For -- I would not nail it down now only to the electric platform generally, because basically, it's two different entities working on it. One contract engineered with one team, one contract engine neared by another team, of course, security as well, that the timing between the two cars is pretty much independent, and we do not have a knock-on effect of a first free SOP onto the SOP that we would have with Polestar 4. So it's not just due to attaching a different electronic architecture.

Okay, thank you.

Thank you.

Thank you. We will now take the next question. It's from the line of Andres Sheppard from Cantor Fitzgerald. Please go ahead.

Hi, good morning, or good afternoon. Thank you for taking our questions. Congratulations on the quarter. A lot of our questions have been asked. Maybe I'm wondering, can you give us an update on how the plans regarding the manufacturing in South Carolina is progressing? Is that still on track? Are there any updates there? Thank you.

The update is that, it's on track. The timing for the production in South Carolina to start producing Polestar 3 and again, not only for the U.S. but as well for export is has been in the middle of '24 and space for that timing. So indeed we will start Polestar 3 in the U.S. in the middle of 2024.

Got it. Okay, that's very helpful, Thomas. Thank you. And then maybe as a follow up, is it possible to quantify a little bit further the relationship with Hertz, in terms of how deliveries are going are kind of what's to be expected for either later this year or next year. Just trying to get a sense of how we should be thinking about it? Thank you.

Now in regards to Hertz. Still according to plan with the 65,000 cars gradually done being delivered over this five-year period. There was an initial tranche that was delivered in 2022, which then continues to build during 2023 before landing at a more level run-rate as from next year and for the remaining volumes. So it's going to be a gradual build up before we get to more of a kind of a stabilized run-rate of the 65.

Thank you. [Operator Instructions] And we will now take the next question is from the line of Alex Porter from Piper Sandler. Please go ahead.

Excellent. Thanks very much. So I just have one question. It goes back to this topic of software. I think it's an important one, it seems a lot of people in the industry are struggling with it. So basically, I suppose the main question is can you summarize, Polestar's philosophy with regard to software development? And then maybe more broadly, your partners' philosophies Volvo, and GE's philosophies with regard to software development? And do you think that any fundamental changes need to be with made by the industry or by your company more specifically, with regard to software in order to prevent delays to vehicle launches or other production disruption in the future? Thanks very much.

All right. I have to go back here a little bit to how the product portfolio and what we call the essence like model of Polestar is actually what it's based on. And from -- almost from day one with post that we had to explain, our key thing is not to, to have that one thing where we build on and what we invest into, and this is the base of everything. It's the opposite. We have the access to different technology in the group, and dependent on the type of car that's the price point of the car, the technology that is needed for that we pick and choose that technology. And for that reason, yes, there are different technology base for our cars, which we then for the customer experience, of course tune to become Polestar. That's where set interface for the entertainment, how you actually drive our car, what are the functions that is of course, what is unified. But the technology might differ underneath. And there are projects, like the Polestar 3, which obviously is very much at the pinnacle of innovative, great technology, coming to the market, with an electronic architecture which indeed will in the near future enable a LiDAR-supported unsupervised highway piloting, I mean, this is obviously part of this architecture. And I would say, yeah, should I call it not understandable reasons, but of course, the complexity and innovativeness of that platform, is of course, something that has to be handled. This is a of course, the case now we're supposed to three goods that we indeed have, at the other hand, at the same time the living proof of that spreading unto you different technology phases actually has the advantage that you in a way derisk as well, the company. Because indeed, there is no knock on effect on the Polestar 4. It is in a way that independence development, that there is no knock on effect. That's where we -- on the other hand, see, of course, incredible learning curve, when you ask now, what are the learnings and the consequences. I mean, obviously, this big technology shift that is happening right now in the generally in the automotive world, going into electronic architectures in the car, which of course are very different to what the kind of chemistry [ph] you used to do in the past. Yes, there are some painful learning steps to be taken now. But I'm very sure that if this will pay off in the future, we have already today in the Polestar 2 great benefits of new technology with over-the-air updatability which we perform in this car. And again, that was painful in the very first moments. The first half year definitely was a high learning curve required. But look at it today, I mean, we almost without big who have rolled out over the updates with the Polestar 2 is this is not a topic anymore. It's just happening. So I think indeed, what we see now with Polestar 3 happening, yeah that's of course an initial hiccup, but I think the-- and the technology that we revisit and the learning that we do with it will generally be a very good foundation for a much smoother future in that.

Okay, very good. Thanks a lot. I appreciate it.

Thanks, Alex.

Thank you. There are no further questions for the telephone. At this time, I would like to hand back over to the speakers for shareholder questions.

Yeah, right. We have shareholder questions. And Bojana was bringing the top-three important questions together here and I have them in front of me. And I would like to go through them. And we have question number one, why has Polestar not invested in brand awareness in the U.S. market? Question mark. The brand has still not been considered as an alternative in numerous comparisons of the [Indiscernible] technically exceeds many of its most popular competitors? Question mark. This statement, of course, is provoking me a little bit with has not invested in brand awareness, which I cannot confirm. We have invested heavily over the last years into the brand awareness of Polestar. And I have the meet now here to fundamentally actually almost take the opposite. Because the just looking very, very fact-based on what brand awareness Polestar achieves, and now specifically in the U.S. In a study that's researcher aided brand awareness, we have improved a year ago when we had the big Super Bowl push and made that jump to a 10% brand awareness at that point in time. And when you see now, a year later, without a spectacular thing like Super Bowl, but constant and permanent work with our marketing was our communications, we have stepped up from this 10% to a 13% aided brand awareness. And now to put that into perspective, this 13% if you compare that to one of the competitors is very often mentioned them as kind of that much better than Polestar actually, it was 14.6% is very, very close to this 13%. So the perception that we are limping behind in brand awareness in the U.S. factually is actually much, much less difference than the felt lack of brand awareness of Polestar. Now I don't want to make that now like, this is not a topic for us. Of course, we want to improve and of course, we want to improve brand awareness, especially in the U.S. And for that reason, they are just now in this quarter, quarter 2, a trending million-dollar marketing campaign in the second quarter in the U.S. market active. And we have with the Polestar 3, PVC a very, very successful high engagement rate, where spending actually much less than others, achieving much more of action and response on that television of Polestar 3. So I think it's a combination on one hand, of course spending money and doing something, but doing it in a very, very efficient way and having lots of bang for the bucks and that means really high amount of customer activation and generating traffic on our.com with these actions. So that's I think the U.S. market of course, it will take us well time, it will take as well more cars the Polestar 3 and 4 coming to the market. Of course, this is as well very much needed. And on the other hand, the Polestar spaces with a significant amount being out there and covering coming on over this tipping point where you just simply feel the presence of the brand. Still building that up. But I want to say again, we are not at all in that bad position as it's sometimes displayed. And to remind you, as well selling cars, I mean, actually selling the Polestar 2 as an electric car and it's on fifth place in their statistic just to remind you of this selling success of the kind that respect being in front of Mercedes EQS, Nissan Leaf, the Taycan of course selling many, many more Polestar 2s. Second question picks up the similar topic, but it's a bit broader. How does Polestar 2 dramatically increase market awareness? As of now nobody, I know has heard of Polestar 2. Again I would love to put that in perspective in -- from I presume this comes from the U.S. this question. I think we have to balance as well a little bit. Yes, this I call it now slightly limping behind in U.S. market and brand awareness. If you put that in to the global perspective as being in 27 markets out there. And in many the overwhelming majority of this market having a much bigger distance to our PSL who took transit we are compared to in terms of brand awareness. I think that that is very important to understand. Now, let's take a closer look at a neutral [ph] market Germany, 25% brand awareness of Polestar in Germany versus a 5% brand awareness of Neo or BYD was 4.5%. Now we have one measurement in Holland, in the Netherlands 41% brand awareness of Polestar, 3.8% of Lucid, I mean that, to show what difference is in markets where we are very, very well established and strong. And then compared to that our difference in the U.S. is not that big as it is in other countries where we're really exceeding very much the brand awareness of our peers. So for that reason, I think that young and still small brand Polestar has actually quite a good starting point in order to, of course, still accelerate and build brand awareness in those markets. And again, all that has been achieved with this one Polestar 2 thinking that we will be in '24 in these markets with three products of course, it's about a complete different base. Question number three, we actually covered already with one of the questions before about the South Carolina plant. And when it will start producing again confirming that mid-'24 is the timing for South Carolina production. Right. Yeah, closing remarks and from my side here. In '24 we will have that portfolio of three cars. And it will include two electric SUVs, which obviously is very important because that's a fast growing segment in the EV space. Polestar 3, the display costs will in the retail locations arrive by the end of this summer. And we will do a very very nice ramp up of our marketing and customer engagement activities. Because of course we want to build that strong order book for Polestar 3 this year. The launch of Polestar 4 created a lot of headlines last month and the bold and really great design of the car I think met really nice resonance with the media and the customers. And its start up production, we confirm again here is quarter four of 2023 and the start of production for the rest of the world is early in 2024. Then the Polestar 2, we will continue to build on the success of the car by starting the customer deliveries for its model year '24 which is of course a very important modeling upgrade with substantial tech upgrades. And this model year '24 Polestar 2 introducing as well the new front design that has the smartphone signature that you will know from Polestar 3. So I remain, we remain confident that all of this will help us to deliver on the growth ambitions, and of course as well to the positive profitability of Polestar. Yeah, thanks for joining this call.

Yeah. Thank you.

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