The following discussion includes information that Polestar's management believes is relevant to an assessment and understanding of Polestar's financial condition and results of operations. The following discussion should be read together with (i) the financial statements of Polestar Automotive Holding UK PLC as of December 31, 2025 and 2024, and for each of the years in the three-year period ended December 31, 2025, and the related notes thereto, included elsewhere in this Report. All financial numbers in this discussion are presented in thousands of U.S. dollars unless otherwise noted. Polestar's actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in the sections titled "Risk Factors" (see Item 3.D) and "Cautionary Note Regarding Forward-Looking Statements" included elsewhere in this Report. Certain amounts may not foot due to rounding. Polestar Automotive Holding UK PLC Key Factors Affecting Performance Polestar's performance depends on numerous factors and trends. While these factors and trends provide opportunities for Polestar, they also pose risks and challenges as discussed in Item 3.D Risk Factors and below. The following paragraphs explain the key factors that impacted Polestar's financial performance during the year ended December 31, 2025, as well as the key factors and trends which are expected to have a material effect on Polestar's financial condition and results of operations in future periods. Market trends and competition Polestar is a pure play, premium performance electric car brand, designing products engineered to excite consumers and drive change. Global consumer demand for Polestar's vehicles is primarily driven by: 26 Table of Contents •The speed and scale of the transition to electric vehicles from internal combustion engine cars ("ICEs") in general, which is driven by a number of factors, among which are affordability, range covered by an electric car on a single charge, availability of a sufficiently dense charging network, the general public's perception and concerns related to electric vehicles, the scope and size of government incentives, duties and tariffs that impact the price of a car in a particular market, availability of alternative mobility solutions, quality and availability of after-sales services, and the cost of electricity and alternative fuels as well as the overall cost of car ownership. •Demand for premium performance vehicles in general, which is impacted by, among other things, changes in disposable income, the cost and availability of financing arrangements and customer preferences. •Customer preferences within the premium car segment and breadth and depth of available options. Polestar competes with other pure play electric vehicle manufacturers, such as Tesla, as well as established premium automotive manufacturers that also sell vehicles with ICEs. Benchmark Mineral Intelligence, specializing in EV and battery supply chain research and insights, reported global electric vehicles sales (which include BEVs and plug-in hybrid electric vehicles) of 20.1 million cars in 2025, representing growth of 20% during the year compared to 2024. According to the International Energy Agency the key driving factors cited in its annual publication "Global EV outlook 2025", published in May 2025, remain the availability of government incentives and falling BEVs prices in China, the latter encouraging strong adoption of BEVs in the country. Pressure to achieve emissions standards in the EU and the UK acts as a strong incentive for original equipment manufacturers ("OEMs") to push sales of BEVs they offer in the European markets. This is despite the flexibility given to automakers for meeting the 2025 EU emissions reduction target. In Europe, where Polestar sold approximately 78% of its volumes in 2025, representing growth of 55% year-on-year, the total sales of electric vehicles grew to 4.3 million cars, an increase of an estimated 33% in the year ended December 31, 2025 when compared to 2024, according to Benchmark Mineral Intelligence. In the U.S., where Polestar sold approximately 7% of its vehicles in the year ended December 31, 2025, the situation was uncertain given a policy shift away from BEV adoption and expiration of the electric vehicles tax credits on September 30, 2025. According to Benchmark Mineral Intelligence, the total sales of electric vehicles in the U.S. amounted to 1.8 million cars, which represents a decline of 4%. In the rest of the world, where Polestar sold approximately 15% of its vehicles, the sales totaled 1.7 million, an increase of 48% year-on-year. Sales in China grew by 17% to 12.9 million electric cars in 2025. Uncertainty around tariffs and import duties poses downside risks to overall car sales volumes. Overall, continued government support, improving affordability of BEVs, higher density of the charging network and the level of fossil fuel prices will continue to determine the pace of adoption of BEVs. Sales performance In the year ended December 31, 2025, Polestar achieved an increase in retail sales volumes of approximately 34% compared to the same period in 2024. This growth was driven by an attractive model line-up and an acceleration of the strategic shift toward the active selling model. Polestar's sales and distribution model Polestar delivers its vehicles to both retail and fleet customers across key markets in Europe, North America, the Asia Pacific region and various import markets. Of the brand's 28 active markets, 20 are operated through Polestar's own dedicated sales units and, in the remaining eight markets, the Company leverages strategic partnerships with importers, further strengthening its international presence. In 2025, Polestar has also significantly expanded its global retail network, enhanced customer access and strengthen its presence in both established and emerging markets, with an additional 71 sales points outside of China. A key milestone in this growth was the successful start of sales in France in 2025, further solidifying Polestar's footprint in Europe. Polestar's expansion in France will include both direct-to-consumer sales via the Polestar website, as well as through several retail sites across the country, relying on selected retail partners from the Volvo Cars' network. Market demand and response Despite a challenging macroeconomic environment and intensified competition, Polestar experienced resilient demand and successfully grew volumes through targeted actions. These included pricing optimization, effective inventory management, and strategic marketing campaigns. The impact of these actions supported a more diverse product mix, which included Polestar 2, Polestar 3, and Polestar 4 compared to Polestar selling predominantly Polestar 2 in 2024 and improved delivery volumes. Product portfolio and model mix As of December 31, 2025, Polestar's portfolio consisted of the following models: •Polestar 2 - As the most established model in the lineup, Polestar 2 continues to enjoy strong demand and maintains a competitive position in its segment. •Polestar 3 - Since its launch in late first half of 2024, Polestar 3 has steadily increased its segment share, fueled by positive media coverage, multiple industry accolades, and strong performance in range tests, including the winter El Prix 2025 range test. •Polestar 4 coupé - A key strategic focus ever since Polestar started ramp-up of deliveries of the car in Q3 2024, the Polestar 4 coupé has made a significant contribution to overall volumes and enhanced brand visibility. 27 Table of Contents •Polestar 5 - Polestar 5 is our brand halo car, bringing a new level of performance and luxury to the grand-tourer segment. The four-door Grand Tourer (GT) has already received fantastic reviews, as part of its launch tour across Europe. The four-door GT was presented in 2025, with deliveries expected from summer 2026. Each Polestar model has a number of variants, and the list price varies for each variant of each model, as well as for the same variant in different markets. Therefore, Polestar's new car sales revenues are driven by the volume of cars sold, the mix of models and variants in those sales as well as the market where those sales occur. During the year ended December 31, 2025, Polestar received several awards and accolades, being the most significant: •Mille Miglia Green 2025. •Guinness World Record. •Top Gear's Electric Awards 2025. •Red Dot Design Awards. •Luxury car of the year in Australia. •Car of the Year in Korea. Costs of sales and gross profit (loss) The most significant component of Polestar's cost of sales is the inventory cost of the vehicles sold. Inventory cost consists of all costs directly related to the manufacture of Polestar's vehicles and the costs required to bring the vehicles to their present location and condition. This includes, among other expenditures, the amounts paid for materials, components and production cost (e.g. labor, overhead and depreciation & amortization) under the manufacturing and vehicle supply agreements with Volvo Cars and Geely and contracts with other third-party suppliers, costs of freight and any duties and tariffs payable on the import of components and / or vehicles. There may be a lag between changes in these underlying costs and the impact of these changes on Polestar's statement of net loss due to the period between vehicles entering Polestar's inventory and their sale to customers. Other components of costs of sales include, when applicable: (i) impairment of tangible assets (property, plant and equipment), intangible assets and leased assets when there are indicators of impairment and the recoverable amount of one or more of Polestar's cash-generating units ("CGU") is below its carrying amount, which may be a result of, among other things, changes in forecasts of lifecycle volumes, prices, manufacturing costs and / or interest rates; (ii) adjustments to the net realizable value ("NRV") of inventory which is primarily driven by changes in the expected price of sales of vehicles in inventory as well as the volume of this inventory; (iii) cost of residual value guarantees given to certain partner financial institutions that provide financing to Polestar's customers; and (iv) warranty costs. Polestar's gross margins are dependent upon its ability to grow sales of its vehicles and manage these costs as well as implement cost savings initiatives. As of December 31, 2025, Polestar assessed the values of its CGUs for the Polestar 2 (current generation expected to be discontinued in 2026), Polestar 3 and Internal Development Projects (primarily made up of the Polestar 5) in light of slower than expected industry-wide BEV adoption in the near term, lower demand in the upper EV premium segment, changes in regulations and policies and competitive dynamics. Polestar estimated the recoverable amount of these CGUs based on their value in use which uses forecast future cash flows and requires Polestar to make various assumptions. including related to future sales volumes, sales prices and manufacturing costs. The impact of lower demand than previously expected, the changes in regulation and policies, and market conditions were reflected in these assumptions as of December 31, 2025. As a result, Polestar recognized an impairment expense related to these CGUs of $1,098.9 million in 2025. Inflation and price risk Polestar's costs and expenses are impacted by, among other things, the prices of components, materials, labor and equipment used in the production of Polestar vehicles as well as the cost of freight. Historically the prices of lithium, cobalt, and nickel, which are used in car batteries, and oil, which has a significant impact on freight costs, have been volatile. The cost of labor and other inputs are generally linked to inflation. Interest rates and foreign exchange rate Polestar faces interest rate risks from its exposure to floating and variable interest rates primarily on its borrowings. The majority of Polestar's borrowings have floating rates and, therefore, its finance costs are linked to movements in interest rates as well as the volume of the borrowings. The most relevant interest rates are: 1-, 6- and 12-month Term SOFR and 3-month EURIBOR which are shown in the table below: Index Daily average rate in 2025(% per year) Daily average rate in 2024(% per year) 1-month Term SOFR 4.21 5.12 6-month Term SOFR 4.05 4.92 12-month Term SOFR 3.86 4.65 3-month EURIBOR 2.18 3.59 The global nature of Polestar's business exposes the Group's financial performance to risks arising from fluctuations in currency exchange rates ("FX rates"). Changes in FX rates primarily impact the Group's profit or loss when a Group entity has a monetary item denominated in a currency different to its functional currency, such as a foreign currency borrowing or a trade payable in a foreign 28 Table of Contents currency. The Group presents foreign currency gains or losses related to its borrowings as part of foreign exchange gains (losses) on financial activities, net. All other foreign currency gains or losses are presented as part of foreign exchange gains (losses) on operating activities, net. The most relevant currency pairs for Polestar are: Currency pair Rate as of December 31, 2025 Rate as of December 31, 2024 End of day average rate on December 31, 2025 End of day average rate on December 31, 2024 CNY – SEK 1.32 1.51 1.37 1.47 USD – SEK 9.21 11.03 9.82 10.57 CNY – USD 0.14 0.14 0.14 0.14 EUR – USD 1.18 1.04 1.13 1.08 Tariffs and other regulation A significant portion of Polestar's vehicles sold in the year ended December 31, 2025 were manufactured in China. Both the U.S. and the EU have imposed tariffs against BEVs imported from China and these tariffs increase the total cost of vehicles manufactured in China and sold into these markets. Polestar also has manufacturing facilities outside of China - production of PS3 in Charleston, South Carolina, U.S. began in 2024 and production of PS4 at Busan, South Korea began in 2025. Tariffs are subject to change and Polestar is unable to predict what tariffs will be applicable to its cars in the future. If tariffs are imposed that increase the cost of Polestar's vehicles and Polestar does not increase its prices to compensate for this increase in costs, its gross margin will be reduced. If Polestar does increase its prices, it may negatively impact market demand for Polestar's cars and therefore future sales volumes. The table below illustrates the tariffs applicable on Polestar's main plant to market routes as of December 31, 2025: Plant Market Tariff applicable to Polestar BEVs U.S. EU 10.0% China EU 28.8% Korea EU 10.0% Korea U.S. 15.0% China UK 10.0% China U.S. 137.5% Other key factors impacting performance During the year ended December 31, 2025, Polestar has continued to implement changes and headcount reductions to its cost structure in order to maintain competitiveness and improve its financial results. This includes restructuring efforts that impacted the R&D and Procurement departments in the UK, China and Sweden, as well as manufacturing in China. Polestar has also implemented a cost discipline program towards fixed cost expenses reduction, which includes labor cost associated with its own employees and full-time consultants through organizational restructuring, as well as streamlining selling, general and administrative activities through continuous improvements in operational efficiency in comparison to 2024, primarily with reduced fixed marketing expenses. A. Results of Operations Polestar conducts its business as one operating segment with primary commercial operations in Europe, North America, Asia Pacific and various importer markets. While Europe and the North America represent Polestar's primary geographic markets, Polestar's presence is continuing to expand in Asia Pacific. Refer to Note 1 - Basis of preparation in Polestar's Consolidated Financial Statements for more information on the basis of presentation and Note 5 - Geographic information for more information on segment reporting. The following paragraphs describe the key components of revenue, income, and expenses as presented in our Consolidated Statement of Loss and Comprehensive Loss. Key operational highlights The following table summarizes the key operational highlights as of and for the years ended December 31, 2025, 2024 and 2023. For the year ended December 31, 2025 2024 2023 Business metrics Retail sales1 60,119 44,851 52,796 Including external vehicles with repurchase obligations2 2,366 1,651 2,859 Including internal vehicles 3,455 2,927 1,958 29 Table of Contents Markets3 28 27 27 Sales points4 211 175 153 of which sales points, excluding China 211 140 110 Service points5 1,243 1,170 1,149 1 - Retail sales figures are sales to end customers. Retail Sales include new cars handed over via all sales channels and all sale types, including but not restricted to internal, fleet, retail, rental and leaseholders' channels across all markets irrespective of their market model and setup and may or may not directly generate revenue for Polestar. 2 - In the year ended December 31, 2025, includes 179 cars that were handed-over as security under a financing arrangement. 3 - Represents the markets in which Polestar operates. 4 - Represents Sales Points, including retail locations which are physical facilities (such as showrooms), actively selling Polestar cars, and pre-space activations, which represent locations with an ongoing project to build a retail location but that have started selling Polestar cars. 5 - Represents Volvo Cars service centers to provide access to customer service points worldwide in support of Polestar's international expansion. For the year ended December 31, 2024 2023 Restatement for new definition (Retail sales) 44,851 52,796 Published as per previous definition1, 2 44,458 54,626 1 - Represents the sum of total volume of vehicles delivered for (a) external sales of new vehicles without repurchase obligations, (b) external sales of vehicles with repurchase obligations, and (c) internal use vehicles for demonstration and commercial purposes or to be used by Polestar employees (vehicles are owned by Polestar and included in inventory). A vehicle is deemed delivered and included in the volume figure for each category once invoiced and registered to the external or internal counterparty, irrespective of revenue recognition. Revenue is recognized in scenarios (a) and (b) in accordance with IFRS 15, Revenue from Contracts with Customers ("IFRS 15"), and IFRS 16, Leases ("IFRS 16"), respectively. Revenue is not recognized in scenario (c). 2 - The figures in this row reflect actual sales volumes calculated using the former global volumes definition described in footnote 1 above and may, for certain periods, differ slightly to previously reported figures due to rounding. Revenue Polestar primarily generates revenue via the sale of its vehicles, sales of carbon credits, sales of licenses and royalties, sales of software and performance engineered kits, vehicle leasing, and other revenue. •Revenue from the sale of vehicles constitutes the primary source of revenue and was derived from sales of the PS2, PS3 and PS4 in 2025. Polestar's main customers for electric vehicles consist of private individuals (through the "direct-to-consumer" channel), fleet customers, dealers and certain Polestar sales points, importers, financial service providers, and, prior to 2025, Polestar's equity method investment, Polestar Times Technology (in April 2025, Polestar signed an agreement to terminate the business Polestar Times Technology (see Item 4.B Information on the Company— Business Overview—Sales and Distribution for further details). Some of these vehicle sales are to the related parties Volvo Cars and Ziklo Bank AB (previously Volvofinans Bank AB). •Revenue from sales of carbon credits is derived from sales of regulatory credits to external companies or related parties. •Revenue from the sale of software and performance engineered kits is derived from intellectual property licensed to Volvo Cars related to software upgrades and enhancements for Volvo Cars' vehicles. •Vehicle leasing revenue is derived from Polestar's operating lease arrangements. •Other revenue is derived from sales of automotive research and development services and intellectual property licensed to Volvo Cars enabling Volvo Cars to source and sell Polestar's vehicles parts and accessories. Cost of sales Cost of sales consists of inventory costs and other costs directly related to Polestar's revenue generating activities. Inventory costs are purchase costs, conversion costs, and other costs incurred in bringing the vehicles to their present location and condition. These costs primarily consist of contract manufacturing costs for vehicle production, depreciation of Polestar owned property, plant and equipment ("PPE") and right-of-use ("ROU") assets used in the manufacture of its vehicles, amortization of intangible assets required for vehicle manufacture, warehousing and transportation costs for inventory and customs duties. Other costs directly related to Polestar's revenue generating activities include costs related to warranty provisions, adjustments to net realizable value ("NRV") on inventories and impairment of long-term assets directly related to vehicle production. Selling, general and administrative expense Selling, general and administrative expenses are comprised of personnel expenses for business development and marketing functions, advertising and marketing expenses, sales agent costs, personnel-related expenses for corporate, executive, finance, and other administrative functions, expenses for professional services, including legal, audit, information technology, and accounting services, as well as expenses for facilities, general software costs and licenses, depreciation, amortization, and travel. Personnel-related expenses consist of salaries, benefits, social security contributions, severance payments, and incentive programs. Research and development expense Research and development expenses consist primarily of personnel expenses for Polestar's internal engineering and research and development functions when engaged in work that does not qualify for recognition as an intangible asset, expenses for materials and facilities used in these activities, acquired research programs and gains or losses on the derecognition of intangible assets related to the development of Polestar's vehicles. 30 Table of Contents Polestar conducts various internal research and development programs focused on advancing new technologies and concepts relevant to the business, such as electric vehicle propulsion systems, infotainment and software systems, and the use of eco-friendly recycled materials in production. Expenditures associated with Polestar's internal research and development programs are expensed as incurred while they are in the research phase and not yet expected to contribute to future cash flows. Once Polestar's internal research and development programs reach the development phase and are expected to generate probable future cash flows, such expenditures are capitalized as intangible assets instead of being charged to research and development expenses. Until the fourth quarter of 2023, research and development expenses also included amortization of intellectual property that was considered foundational and previously used in the PS1, currently used in the PS2 and other model vehicles, and expected to be used, in future vehicles. However, in the fourth quarter of 2023, there was a change in the way this intellectual property was used, and the related amortization began to be capitalized into inventory and released into cost of sales when the inventory is sold. Other operating income and expense Other operating income primarily consists of income generated indirectly from the sale of carbon credits and other non-revenue generating activities. Other operating expense primarily consists of non-income tax expense, and other expenses which do not relate to the functions above (cost of sales, selling, general and administrative and research and development). Finance income and expense Finance income consists of interest income in bank deposits. Finance expense is comprised of interest expense associated with Polestar's short, medium, and long-term financing facilities, including amounts owed to related parties, interest expenses associated with lease liabilities, and credit facility expenses. Foreign exchange gains (losses) on financial activities, net Consists of net foreign exchange rate gains and losses, including unrealized exchange gains and losses on financial assets and liabilities. Fair value change - Earn-out rights and Class C Shares Fair value change in earn-out rights consists of changes in fair value to the contingent right to receive earn-outs of Class A and B Shares that were issued to the Former Parent upon the completion of the Business Combination. The value of the Earn-out liability changes with Polestar's share price and other macroeconomic conditions, creating a fair value gain or loss. Fair value change in Class C Shares consists of changes in fair value to the Class C-1 Shares and Class C-2 Shares that were issued to the Former Parent upon the completion of the Business Combination. Share of losses in associates Share of losses in associates consists of Polestar's proportionate share of its associates' net loss, limited to the carrying value of Polestar's investment in its associates. Income tax benefit Income tax benefit consists of current and deferred income tax benefit. Current income tax benefit primarily represents income taxes generated on the current year's taxable profit or loss in each foreign jurisdiction. Deferred income tax benefit represents differences generated between carrying amounts in the Consolidated Statement of Financial Position and the corresponding tax basis for assets or liabilities, multiplied by the applicable jurisdiction's income tax rate. Result of operations for the years ended December 31, 2025, 2024 and 2023 The following table summarizes Polestar's Consolidated Statement of Loss and Comprehensive Loss for the years ended December 31, 2025, 2024 and 2023. All figures presented in the table below are in thousands of U.S. dollars unless otherwise stated. For the year ended December 31, 2025 vs. 2024 variance 2024 vs. 2023 variance 2025 20241 20231 $ % $ % Revenue 3,058,109 2,034,261 2,368,085 1,023,848 50.3 (333,824) (14.1) Cost of sales (4,142,019) (2,910,428) (2,778,222) (1,231,591) (42.3) (132,206) (4.8) Impairment expense, net of reversals (1,049,851) (622,092) (339,568) (427,759) (68.8) (282,524) (83.2) Other cost of sales (3,092,168) (2,288,336) (2,438,654) (803,832) (35.1) 150,318 6.2 Gross loss (1,083,910) (876,167) (410,137) (207,743) (23.7) (466,030) (113.6) Selling, general and administrative expense (856,458) (890,703) (944,177) 34,245 3.8 53,474 5.7 Research and development expense (77,636) (38,350) (157,280) (39,286) (102.4) 118,930 75.6 Other operating income 52,413 59,432 62,937 (7,019) (11.8) (3,505) (5.6) Other operating expense (87,810) (23,818) (58,323) (63,992) (268.7) 34,505 59.2 Foreign exchange gains (losses) on operating activities, net 44,144 (43,705) 37,466 87,849 201.0 (81,171) (216.7) 31 Table of Contents Operating loss (2,009,257) (1,813,311) (1,469,514) (195,946) (10.8) (343,797) (23.4) Finance income 8,996 23,879 32,329 (14,883) (62.3) (8,450) (26.1) Finance expense (385,190) (341,182) (213,242) (44,008) (12.9) (127,940) (60.0) Foreign exchange gains (losses) on financial activities, net 50,282 (52,603) 37,236 102,885 195.6 (89,839) (241.3) Fair value changes - Earn-out rights and Class C shares 23,391 129,124 465,168 (105,733) (81.9) (336,044) (72.2) Share of losses in associates (49,145) (4,970) (43,304) (44,175) (888.8) 38,334 88.5 Loss before income taxes (2,360,923) (2,059,063) (1,191,327) (301,860) (14.7) (867,736) (72.8) Income tax benefit 3,692 9,166 9,452 (5,474) (59.7) (286) (3.0) Net loss (2,357,231) (2,049,897) (1,181,875) (307,334) (15.0) (868,022) (73.4) 1 - Some prior-year's figures and descriptions were adjusted (see Voluntary re-presentation from previous year in Note 2 - Material accounting policies and use of significant judgements and estimates) in the Consolidated Financial Statements included elsewhere in this Report. Comparison of the years ended December 31, 2025 and 2024 Revenue Polestar's net revenue for the year ended December 31, 2025 was $3,058.1 million, an increase of $1,023.8 million, or 50.3% compared to $2,034.3 million for the year ended December 31, 2024. Revenue from related parties for the year ended December 31, 2025 was $352.3 million, an increase of $76.0 million, or 27.5% compared to $276.3 million for the year ended December 31, 2024. The following table summarizes changes in the components of revenue and related changes between annual periods. All figures presented in the table below are in thousands of U.S. dollars unless otherwise stated. For the year ended December 31, Variance 2025 2024 $ % Sales of vehicles 2,805,635 1,975,864 829,771 42 Sales of carbon credits 192,386 10,918 181,468 1,662 Sales of licenses and royalties 32,374 11,851 20,523 173 Vehicle leasing revenue 12,396 17,175 (4,779) (28) Sales of software and performance engineered kits 10,055 15,344 (5,289) (34) Other revenue 5,263 3,109 2,154 69 Total 3,058,109 2,034,261 1,023,848 50 The increase in sales of vehicles was primarily driven by: •Overall higher sales volumes, driven by an accelerated transition to an active selling model and retail network expansion, resulting in an increase of $559.2 million. PS4 was the main driver of the increase, becoming the best‑selling model. PS3 also showed volume growth, while PS2 volumes declined compared to the previous year. •Higher revenue per vehicle sold resulted in a revenue increase of $270.5 million, driven by mix improvement with increased proportion of PS4 and PS3 as of December 31, 2025 versus December 31, 2024, reflecting their full‑year impact in 2025, as both models were introduced in fall 2024. The increase in revenue from sales of carbon credits of $181.5 million was primarily driven by the EU Pooling agreement related to the calendar year 2025. The increase in sales of licenses and royalties of $20.5 million was mainly due to an increase in the cumulative volume of Polestar vehicles in circulation (the "car park"). Vehicle leasing revenue for the year ended December 31, 2025 was $12.4 million, a decrease of $4.8 million, or 28% compared to $17.2 million for the year ended December 31, 2024 reflecting a lower volume of vehicles sold with repurchase obligation. Sales of software and performance engineered kits for the year ended December 31, 2025 were $10.1 million, a decrease of $5.3 million, or 34% compared to $15.3 million for the year ended December 31, 2024. The decrease is primarily a result of lower revenue performance software and engineered kits for Volvo cars. Other revenue for the year ended December 31, 2025 was $5.3 million, an increase of $2.2 million, or 69% compared to $3.1 million for the year ended December 31, 2024. This increase is mainly due to an increase in parts and accessories volume for Polestar's vehicles to customers. Cost of sales The increase in cost of sales for the year ended December 31, 2025 is related to a higher volume and carline mix, combined with higher duties due to an increase in the tariffs, primarily from China to the EU. There was also an increase of $427.8 million in impairment charges to $1,049.9 million in the year ended December 31, 2025 compared to $622.1 million in the year ended December 31, 2024. 32 Table of Contents Gross loss Gross loss for the year ended December 31, 2025 was $1,083.9 million, an increase of $207.7 million, or 24%, compared to a gross loss of $876.2 million for the year ended December 31, 2024 primarily due to the factors described above. Selling, general and administrative expense The decrease in selling, general and administrative expense was $34.2 million, driven by cost discipline and restructuring initiatives of $99.6 million, including headcount reductions, optimized marketing spend commensurate with advertising activity to support sales and the launch of Polestar 5 model in 2025, partially offset by an increase in expenses to remunerate Polestar's selling partners under the 'non-genuine agency model' of $65.4 million primarily reflecting higher sales volumes. Research and development expense The increase was primarily driven by higher spend with lower capitalization mainly due to the start of new programs currently in the research stage and partially offset by lower depreciation. Other operating income The decrease in the year ended December 31, 2025 compared to the year ended December 31, 2024 is mainly due to lower income from Polestar Times Technology services of $11.4 million, partially offset by an increase arising from the indirect sale of carbon credits of $18.6 million. Other operating expense The increase was primarily due to an increase in restructuring and redundancy expenses of $67.6 million during the year ended December 31, 2025 driven by personnel reductions and facility‑related impairment charges. Foreign exchange gains (losses) on operating activities, net The net gains in the year ended December 31, 2025, compared to the net losses in the year ended December 31, 2024, were primarily due to positive changes in the underlying currencies of Polestar's account payables and accounts receivable, including the weakening of the U.S. dollar against the Swedish Kroner along the year 2025, as compared to a strengthening in 2024. Finance income The decrease was primarily the result of lower interest income of $14.9 million, mainly related to lower interest received on cash and cash equivalent accounts. Finance expense The increase was primarily the result of higher interest expenses related to external loans and borrowings of $55.9 million, mainly driven by higher levels of outstanding external short-term financing, partially offset by lower interest expense on related parties financing of $11.9 million due to lower interest rates. Foreign exchange gains (losses) on financial activities, net Foreign exchange gains on financial activities of $50.3 million during the year ended December 31, 2025 compared to losses of $52.6 million during the year ended December 31, 2024 was a result of positive changes in foreign exchange rates on Polestar's foreign currency borrowings, mainly driven by Chinese yuan and U.S. dollar fluctuations. Fair value changes - Earn-out rights and Class C shares The decrease of $105.7 million in positive fair value changes was primarily attributable to the smaller relative decrease in Polestar's ADS price over 2025 when compared to 2024 - Polestar's ADS price decreased by 32.16% (adjusted for the ADS ratio change from $1.05) in 2025 compared to 53.54% in 2024 - and the reduced positive impact of this decrease as the Earn-out rights and Class C shares move further out-of-the-money. Share of losses in associates The increase of $44.2 million was primarily attributable to capital contributions made by Polestar to Polestar Times Technology, which triggered the recognition of unrecognized losses in the associate, for the year ended December 31, 2025 when compared to the year ended December 31, 2024. Income tax benefit The decrease of $5.5 million is primarily due to the movement of deferred tax assets on CGU impairment and NRV inventory impairment. 33 Table of Contents Comparison of the years ended December 31, 2024 and 2023 Revenue Polestar's net revenue for the year ended December 31, 2024 was $2,034.3 million, a decrease of $333.8 million, or 14% compared to $2,368.1 million for the year ended December 31, 2023. Revenue from related parties for the year ended December 31, 2024 was $276.3 million, an increase of $137.6 million, or 99% compared to $138.7 million for the year ended December 31, 2023. The following table summarizes changes in the components of revenue and related changes between annual periods. All figures presented in the table below are in thousands of U.S. dollars unless otherwise stated. For the year ended December 31, Variance 2024 2023 $ % Sales of vehicles 1,975,864 2,313,124 (337,260) (15) % Sales of software and performance engineered kits 15,344 18,994 (3,650) (19) % Sales of licenses and royalties 11,851 12,125 (274) (2) % Sales of carbon credits 10,918 1,452 9,466 652 % Vehicle leasing revenue 17,175 17,421 (246) (1) % Other revenue 3,109 4,969 (1,860) (37) % Total 2,034,261 2,368,085 (333,824) (14) % Sales of vehicles for the year ended December 31, 2024 were $1,975.9 million, a decrease of $337.3 million, or 15% compared to $2,313.1 million for the year ended December 31, 2023. The decrease was primarily driven by: •A decrease in volumes resulting in a decrease of $371.5 million, primarily due to lower global vehicle sales of PS2 and delays in sales ramp up of new car lines; and •An increase in average selling prices, net of discounts, resulting in an increase of $34.3 million, primarily due to the change in sales mix as Polestar transitioned from selling only the PS2 for almost all of 2023 to selling the PS2, PS3 and PS4 by the end of 2024. Sales of software and performance engineered kits for the year ended December 31, 2024 were $15.3 million, a decrease of $3.7 million, or 19% compared to $19.0 million for the year ended December 31, 2023. The decrease is primarily a result of Polestar's continued focus on developing and selling its own vehicles rather than its performance engineered kits for Volvo cars. Sales of carbon credits for the year ended December 31, 2024 were $10.9 million, an increase of $9.5 million, or 652% compared to $1.5 million for the year ended December 31, 2023. This increase is driven by Polestar entering into and executing more contracts to sell its excess carbon credits as compared to the previous year. Vehicle leasing revenue for the year ended December 31, 2024 was $17.2 million, a decrease of $0.2 million, or 1% compared to $17.4 million for the year ended December 31, 2023 reflecting a stable volume of vehicles sold with repurchase obligations. Other revenue for the year ended December 31, 2024 was $3.1 million, a decrease of $1.9 million, or 37% compared to $5.0 million for the year ended December 31, 2023. This decrease is mainly the result of (1) a decrease in sales of Polestar's research and development services to Volvo Cars of $5.0 million, offset partially by an increase of $3.4 million in sales under Polestar's intellectual property license to Volvo Cars which grants Volvo Cars the rights to source and distribute parts and accessories for Polestar's vehicles to customers in exchange for sales-based royalties to us. Cost of sales Cost of sales for the year ended December 31, 2024 was $2,910.4 million, an increase of $132.2 million, or 5% compared to $2,778.2 million for the year ended December 31, 2023. During the year ended December 31, 2024, Polestar recognized increase in impairment charges of $282.5 million as compared to the year ended December 31, 2023. This increase was partially offset by a decrease in write-downs of inventories to net realizable value of $56.8 million, a decrease in inventory cost of $71.5 million primarily related to lower sales volumes, and decreased warranty costs of $24.6 million. Gross loss Gross loss for the year ended December 31, 2024 was a gross loss of $876.2 million, an increase in gross loss of $466.0 million, or 114% compared to a gross loss of $410.1 million for the year ended December 31, 2023 primarily due to the factors described above. Selling, general and administrative expense Selling, general and administrative expenses for the year ended December 31, 2024 were $890.7 million, a decrease of $53.5 million, or 6% compared to $944.2 million for the year ended December 31, 2023. This decrease was primarily due to a decrease of $78.6 million in advertising, sales, and promotion expenses. An additional decrease was attributed to lower lease expenses of $10.6 million. These decreases were partially offset by an increase in costs associated with purchased services from related parties of $23.2 million, higher employee compensation costs of $5.6 million, and an increase in professional service related expense of $8.1 million. 34 Table of Contents Research and development expense Research and development expenses for the year ended December 31, 2024 were $38.4 million, a decrease of $118.9 million, or 76% compared to$157.3 million for the year ended December 31, 2023. This change was primarily driven by a $68.9 million decrease in amortization expense due to the change made in Q4 2023 to capitalize the amortization expense of intellectual property used in the development of the PS1 and PS2 into inventories, rather than to research and development expenses. The decrease was further impacted by a $53.9 million increase in capitalization expense in 2024 compared to 2023, driven by a higher number of internal development projects being capitalized as intellectual property. Other operating income, Other operating expense and Foreign exchange gains (losses) on operating activities, net These three lines were previously presented together as "Other operating income (expenses), net" (see Voluntary re-presentation from previous year in Note 2 - Material accounting policies and use of significant judgements and estimates) in the Consolidated Financial Statements) for the year ended December 31, 2024, and they sum a net expense of $8.1 million, a decrease of $50.2 million, or 119% compared to an income of $42.1 million for the year ended December 31, 2023. This decrease was primarily driven by higher negative foreign exchange effects on working capital of $81.2 million and reduced income of $15.1 million for related party sales of plant operation services. This loss is partially offset by the recognition of $26.9 million in income and reduced expenses of $18.7 million related to services provided to Polestar Times Technology. Finance income, Finance expense and Foreign exchange gains (losses) on financial activities, net Finance income for the year ended December 31, 2024 was $23.9 million, a decrease of $8.5 million, or 26% compared to $32.3 million for the year ended December 31, 2023. This decrease was primarily the result of a decrease in interest income on bank deposits of $11.2 million due to lower interest rates and reduced bank deposits. Finance expenses for the year ended December 31, 2024 were $341.2 million, an increase of $127.9 million, or 60% compared to $213.2 million for the year ended December 31, 2023. This increase was primarily the result of an increase of $127.4 million in the aggregated amount of interest expense on credit facilities and financing obligations and interest expense to related parties. The Foreign exchange gains (losses) on financial activities, net were previously presented as finance expense for the year ended December 31, 2024 and as finance income year ended December 31, 2023, as above. See Voluntary re-presentation from previous year in Note 2 - Material accounting policies and use of significant judgements and estimates) in the Consolidated Financial Statements for further information. Fair value change - Earn-out rights As part of the capital reorganization via the merger with GGI on June 23, 2022, Polestar issued earn-out rights. The gain on fair value change - Earn-out rights for the year ended December 31, 2024 was $126.6 million, a decrease of $316.5 million or 71% compared to a gain of $443.2 million for the year ended December 31, 2023. This decrease is primarily attributable to changes in Polestar's share price from $2.26 as of December 31, 2023, compared to $1.05 as of December 31, 2024. Fair value change - Class C Shares As part of the capital reorganization via the merger with GGI on June 23, 2022, Polestar exchanged rights and obligations to the public and private warrant instruments of GGI. The gain on the fair value change of these warrants (i.e. Class C Shares) for the year ended December 31, 2024 was $2.5 million, a decrease of $19.5 million or 89% compared to $22.0 million for the year ended December 31, 2023. This change is primarily attributable to a change in the price of the Class C-1 Shares and the estimated value of the Class C-2 Shares by $0.10, from$0.24 for the year ended December 31, 2023, to $0.14 for the year ended December 31, 2024. Share of losses in associates During the year ended December 31, 2024, Polestar invested an additional $14.5 million in Polestar Times Technology. As agreed upon by Polestar, Xingji Meizu, Polestar Times Technology, and Nanjing Jiangning Economic and Technological Development Zone Industrial Equity Investment Partnership ("Nanjing Investor"), Polestar Times Technology received additional funding from the Nanjing Investor, thus reducing Polestar's ownership percentage of Polestar Times Technology's equity from 49% as of December 31, 2023 to 46.2% as of December 31, 2024. Share of losses in associate for the year ended December 31, 2024 was a loss of $5.0 million, a decrease of $38.3 million, or 89% compared to a loss of $43.3 million for the year ended December 31, 2023. In both years, Polestar's carrying value of its investment in Polestar Times Technology was reduced to zero as a result of its share of Polestar Times Technology's losses. Income tax benefit Income tax benefit for the year ended December 31, 2024 was a benefit of $9.2 million, a decrease of $0.3 million, or 3% compared to a benefit of $9.5 million for the year ended December 31, 2023. This decrease was primarily driven by an increase of the current income tax expense of $21.9 million due to higher taxable income which was partially offset by a decrease in withholding tax expense on license transactions which was a benefit of $2.2 million in the year ended December 31, 2024 compared to an expense of $15.6 million in the year-ended December 31, 2023. B. Liquidity and Capital Resources Overview Polestar's principal uses for liquidity and capital are for funding of operations, repayment of debt, market expansion, and investments in the PPE and intangible assets required to develop and manufacture Polestar's vehicles. 35 Table of Contents Polestar finances its operations primarily through debt and equity. As it relates to debt, Polestar procures some long term committed finance, but also shorter-term bilateral loans and inventory financing. From time to time Polestar may also engage with Related Parties on extending payment terms on purchases of goods or services made from them. As of December 31, 2025, Polestar had net current liabilities of $3,519.6 million. In the year ended December 31, 2025, Polestar generated negative operating and investing cash flows of $915.0 million and $520.7 million, respectively, primarily as a result of scaling up commercialization efforts globally, along with continuing capital expenditures for its vehicles and related technologies. In the year ended December 31, 2025, Polestar generated positive cash flows of $1,693.1 million from financing activities, including new equity of $200.0 million in the form of a PIPE investment from PSD Investment Limited (a related party), and an additional $300.0 million in the form of two PIPE investments of $150.0 million each from two financial institutions. Managing Polestar's liquidity profile and funding needs remains one of management's key priorities. Management's plans to ensure it has sufficient liquidity for the Company's present and future requirements are described further in this section. Going concern Refer to Note 1 - Basis of preparation in the accompanying Consolidated Financial Statements for further details on management's going concern assessment, including its conclusion that there is a material uncertainty related to the execution of management's liquidity and funding plan that casts substantial doubt upon Polestar's ability to continue as a going concern. Cash flows All figures presented in the table below are in thousands of U.S. dollars unless otherwise stated. For the year ended December 31, 2025 2024 2023 Cash used for operating activities (914,989) (991,209) (1,893,841) Cash used for investing activities (520,678) (412,562) (417,619) Cash provided by financing activities 1,693,095 1,424,192 2,104,361 Cash used for operating activities The decrease in cash used for operating activities for the year ended December 31, 2025 when compared to the year ended December 31, 2024 was primarily a result of: •An increase in the net positive value of reconciling items of $741.5 million in 2025 primarily due to an increase in the positive adjustment made related to the expense for impairment of PPE, vehicles under operating leases and intangible assets of $427.8 million and a decrease in the negative adjustment for gain related to the change in fair value of Earn-out rights and Class C Shares of $105.7 million. •Partially offset by: ◦An increase in net loss of $307.3 million - refer to Comparison of the years ended December 31, 2025 and 2024 in Item 5.A - Results of Operations for further details. ◦A net negative change in operating assets and liabilities of $385.0 million in 2025 compared to a net negative change in operating assets and liabilities of $27.0 million in 2024 primarily due to: (i) a variation of $219.1 million in trade and other receivables, prepaid expenses, and other assets, from a net inflow of $85.0 million in 2024 to a net outflow of $134.1 million in 2025 mainly related to an increase in receivables from the related parties Volvo Cars and Geely; (ii) a net outflow in trade payables, accrued expenses, and other liabilities of $170.2 million in 2025 compared to an inflow of $464.9 million in 2024, primarily attributable to an increase of $198.9 million in amounts payable to related parties Volvo Cars and Geely, reflecting extended payment services; and (iii) partially offset by a net increase in changes in inventories to a positive $292.2 million in 2025 from a negative $255.4 million in 2024, primarily due to improved inventory management. Cash used for operating activities for the year ended December 31, 2024 was $991.2 million, a decrease of $902.6 million compared to $1,893.8 million for the year ended December 31, 2023. The decrease in cash used for operating activities is a result of: •An increase in net loss of $868.0 million - refer to Comparison of the years ended December 31, 2025 and 2024 on Item 5.A - Results of Operations for further details. •An increase in the net positive value of reconciling items of $647.6 million primarily due to an increase in the adjustment for impairment expense of $282.5 million in 2024 when compared to 2023 and a decrease in the adjustment for gain related to the change in fair value of Earn-out rights of $316.5 million in 2024 when compared to 2023. •A net positive change in operating assets and liabilities of $252.8 million in 2024 compared to a net negative change of $926.7 million in 2023 primarily due to: (i) net increase in amounts payable, mainly to Volvo Cars and Geely, in 2024 compared to net decreases in amounts payable, mainly to Volvo Cars and Geely, in 2023; and (ii) lower inventory build-up in 2024 as compared to 2023. Cash used for investing activities 36 Table of Contents The increase in cash used for investing activities for the year ended December 31, 2025 when compared to the year ended December 31, 2024 was primarily a result of: •An increase of $87.0 million in cash investments in intangible assets. •An increase of $29.4 million in investments in associates. •Partially offset by a decrease in net additions to other non-current assets of $14.1 million. Cash used for investing activities for the year ended December 31, 2024 was a cash outflow of $412.6 million, a decrease of $5.1 million compared to a cash outflow of $417.6 million for the year ended December 31, 2023. The change was primarily the result of: •A $226.5 million decrease in cash investments in intangible assets in 2024 as compared to 2023; partially offset by •A $153.6 million decrease in cash received from the sale of asset groupings in 2024 as compared to 2023. •A $34.3 million cash investment made in Polestar Times Technology in 2024 with no equivalent in 2023. •A $21.3 million cash investment made in restricted deposits (presented in other non-current assets), with no equivalent in 2023; and •A $10.5 million increase in cash investments in property, plant, and equipment in 2024 as compared to 2023. Cash provided by financing activities The increase in cash provided by financing activities for the year ended December 31, 2025 when compared to the year ended December 31, 2024 was primarily the result of: •An increase of $743.4 million in proceeds from short-term loans and borrowings. •$498.3 million relating to the equity issuance in 2025 which had no equivalent in 2024. •Partially offset by (i) a decrease of $747.2 million in proceeds from long-term loans and borrowings; and (ii) an increase in repayments of loans and borrowings of $227.5 million. Cash provided by financing activities for the year ended December 31, 2024 was $1,424.2 million, a decrease of $680.2 million compared to $2,104.4 million for the year ended December 31, 2023. The change was primarily the result of: •A decrease of $443.3 million in proceeds from long-term borrowings. •An increase in repayment of borrowings of $336.9 million. •Partially offset by an increase of $137.4 million in proceeds from short-term borrowings. Contractual commitments In addition to the liabilities recognized in its Consolidated Statement of Financial Position, Polestar has contractual commitments of $12.6 million for capital expenditure and $371.1 million in other commitments, primarily related to vehicle manufacturing. Refer to Note 29 - Commitments and contingencies in the Company's audited Consolidated Financial Statements included elsewhere in this Report. Management expects to meet these requirements through existing cash balances, operating cash flows, and available credit facilities. Cash and cash equivalents Cash and cash equivalents are held by different entities in the Group. The following table summarizes Polestar's cash and cash equivalents as of December 31, 2025 and the currencies in which it is held, converted to U.S. dollars and presented in thousands: Currency held Cash and cash equivalents SEK 932,617 USD 67,229 EUR 58,052 GBP 39,701 CNY 18,063 Other 43,638 Total 1,159,300 Legal and regulatory requirements in certain of the countries in which the Group operates may restrict or limit the ability to transfer funds, whether in the form of cash dividends, loans or advances, from the entities in those countries to other entities of the Group. As of December 31, 2025, the Group had restricted deposits of $58.1 million which is presented under current and non-current other assets in the Consolidated Financial Statements and is primarily related to its financial obligations under its multi-currency syndicated loan ("Club Loan") and under its residual value guarantees in its contracts with financial institutions in North America which provide leases to customers purchasing Polestar's vehicles. Funding types, maturity, currency and interest rate structure Polestar finances itself through debt arrangements with credit institutions and related parties as further detailed below. 37 Table of Contents Credit institutions Financing arrangements with credit institutions can be categorized as follows: Type Characteristics Chinese loan facilities Facilities provided by Chinese banks which are denominated in CNY or USD. Drawdowns have a maturity of 12 months or less. Bullet payment at maturity. Fixed or floating interest rates based on SOFR or LPR. International loan facilities Facilities provided by international banks which are denominated in EUR or USD. Drawdowns have a maturity of 12 months or less. Bullet payment at maturity. Floating interest rates are based on SOFR or EURIBOR. Trade finance facility ("TFF") EUR denominated secured, syndicated green trade facility entered into on February 28, 2022 and subsequently amended on February 27, 2023 and renewed on February 27, 2025 and on February 25, 2026. All outstanding principal is 100% secured by the new vehicle inventory financed via this facility in accordance with first-ranking English law charge. Drawdowns have a maturity of 6 months. Floating rates indexed to EURIBOR. Market RCFs and Buy-Back facilities Multiple credit facilities with various financial service providers to finance vehicles at the sales locations. The facilities are secured by the underlying assets and financial terms, and legal form vary from market to market. Club Loan Syndicated multicurrency green term loan facility entered into on February 22, 2024. The facility consists of two tranches: Facility A (EUR denominated at €340.0 million with an interest rate at the relevant EURIBOR plus 2.85%) and Facility B (USD denominated at $583.5 million, with an interest rate at the Chicago Mercantile Exchange Term SOFR plus 3.35%). Both facilities have a 36-month repayment period with repayment of all drawdowns due in full at the end of the term, including any unpaid interest and other fees. As of December 31, 2025, Polestar had an equivalent amount of $4,303.8 million in drawn working capital facilities, bilateral and/or syndicated loans from credit institutions, and an uncommitted financing from credit institutions equivalent to $829.7 million available for drawdown. Related party financing Term credit facilities The Group's term credit facilities with its related parties which were fully drawn as of December 31, 2025 are summarized as follows: Counterparty Total facility Maturity Interest rate Volvo Cars2 $1,000.0 million December 29, 20281 SOFR rate plus 4.97% per annum Geely2 $250.0 million June 30, 2027 SOFR rate plus 4.97% per annum Geely $300.0 million June 17, 2026 SOFR rate plus 3.00% per annum 1 - Modified by the second amendment signed on August 21, 2024. 2- Under these term credit facilities, if Polestar announces an offering of shares of any class of share capital, with a proposed capital raising of at least $350.0 million, and no fewer than five institutional investors participating in the offering, then both Geely and Volvo Cars have the right to convert the principal amount of any outstanding loans into equity. On December 19, 2025, Geely and Polestar agreed to convert approximately $300.0 million in principal and interest into Class A ADS at a price of $19.34 per ADS. Asset transfer agreement On December 8, 2023 Polestar and Geely entered into an asset transfer arrangement at fixed interest rate which was designed to provide financing to Polestar in exchange for Polestar transferring legal ownership of certain Polestar unique tooling and equipment that will be used in the manufacturing of the PS3 (the "PS3 Tooling and Equipment") to Geely. In 2025, Polestar executed two separate tooling transfer arrangements at fixed interest rates with Geely entities for the PS4 and PS5 unique vendor tooling in the total amount of $223.7 million. Market RCFs Polestar maintains a Market RCF facility with its related party Volvo Cars. Other Polestar may also delay payments on its related party trade payables, allowing additional liquidity to remain available for other working capital and financial needs. Delays in trade payables usually incur 'interest for late payment' and may result in further collections actions by the supplier. 38 Table of Contents Funding maturity The following table (presented in thousands of U.S. dollars) summarizes the maturity of the Group's primary funding instruments as of December 31, 2025: 0-3 months 3-6 months 6-12 months 1-2 years 2-5 years More than 5 years Total Loans and borrowings 1,496,766 673,101 1,690,808 1,325,814 1,173,416 — 6,359,905 Lease liabilities 9,788 9,656 17,766 24,261 43,360 25,893 130,724 Funding currency The following table (presented in thousands of U.S. dollars) summarizes the currency of the Group's primary funding instruments as of December 31, 2025: USD CNY EUR SEK GBP Other Total Loans and borrowings 4,317,732 1,147,518 658,762 37,165 155,439 43,289 6,359,905 Lease liabilities 1,208 12,780 6,945 68,001 35,613 6,177 130,724 Funding interest rate structure The following table (presented in thousands of U.S. dollars) summarizes the interest rates of the Group's primary funding instruments as of December 31, 2025: Fixed Floating - SOFR Floating - EURIBOR Floating - LPR Floating - Other Total Loans and borrowings 2,339,241 3,263,188 646,808 — 110,668 6,359,905 Lease liabilities 130,724 — — — — 130,724 Covenants Polestar's syndicated Club Loan is subject to covenant requirements including, but not limited to, a defined minimum annual revenue, a defined range for Polestar's debt-to-asset ratio (calculated on a quarterly basis), minimum quarterly cash levels of €400.0 million and maximum quarterly financial indebtedness of $5,500.0 million. Prior to the year ended December 31, 2024, Standard Chartered Bank and the syndicated lenders agreed to amend the minimum revenue covenant for 2024, from an amount of $5,359.9 million to $1,400.0 million, as well as to waive the debt-to-asset ratio covenant for the fourth quarter of 2024 and the first quarter of 2025. As a result of these changes, Polestar was not in default related to the syndicated loan as of December 31, 2024. Prior to June 30, 2025 Standard Chartered Bank and the syndicated lenders agreed to amend the debt-to-asset ratio range to be from 0.90:1 to 1.50:1 for the second quarter of 2025. As a result, Polestar was not in default related to the syndicated loan as of June 30, 2025. On July 9, 2025, Standard Chartered Bank and the syndicated lenders agreed to amend the debt-to-asset ratio range to be from 0.90:1 to 1.45:1 for the third quarter of 2025 and from 0.85:1 to 1.40:1 for the fourth quarter of 2025 and to amend the minimum revenue covenant for 2025 from $7,144.9 million to $3,000.0 million. The outcome of the debt-to-asset ratio as of Q4 2025, and revenue for 2025, were 1.37:1 and $3,058.1 million, respectively. As of December 31, 2025, Polestar was not in breach of these covenants. Polestar's TFF is subject to certain covenant requirements and shares the same minimum quarterly cash covenant as the syndicated Club Loan. As of December 31, 2025, Polestar was not in breach of these covenants. Some of Polestar's Chinese loan facilities are subject to covenant requirements, including, but not limited to, a 300% liability-to-asset ratio of any single borrowing entity within the Group. Additionally, one specific loan facility required Polestar to reach a retail sales volume of 30,000 units by June 30, 2025, otherwise allowing the lender to claim repayment from Polestar of 25% of the outstanding amount of the loan per month thereafter. Polestar reported a retail sales volume of 30,289 cars by June 30, 2025. As of December 31, 2025, Polestar was not in breach of its Chinese loan covenants. Funding and treasury policies and objectives Polestar has established a liquidity risk management framework for management of its short-term and long-term funding and liquidity requirements and prepares long-term planning in order to mitigate funding and re-financing risks. Polestar's liquidity management takes into account the maturities of financial assets and financial liabilities and estimates of cash flows from business operations. Certain key stakeholders engage in a weekly meeting to discuss Polestar's current and forecasted liquidity position to determine the Group's funding needs. Polestar prepares long-term planning to mitigate funding and re-financing risks. Depending on the liquidity needs, Polestar will assess the most appropriate financing option – entering into financing or debt agreements or procuring equity investments to reinforce its capital structure. All drawdowns on loans are evaluated against future liquidity needs, investment plans and the restrictions on debt levels arising from financial covenants on certain of its borrowings. Liquidity and funding plan – Short term (<12 months) In the short term, Polestar works with a series of financing alternatives, which includes, in addition to opportunistic equity financing, the use of credit lines for general corporate purpose, lines that can finance the cars while the cars are on transport (TFF), Market RCFs for cars in Polestar's inventories, non-recourse factoring of its receivables and may, from time to time, defer related party payments. 39 Table of Contents Liquidity and funding plan – Long term (>12 months) For the long term, Polestar looks to optimize and extend credit lines as detailed in Funding types, maturity, currency and interest rate structure. The Group is also looking for opportunities for additional equity offerings. In 2025, the Group raised $200.0 million in equity from PSD Investment Limited in June and $300.0 million in December from two separate investors. On February 2, 2026, Polestar announced a $400.0 million equity investment by Feathertop Funding Limited, a special purpose vehicle consolidated to Sumitomo Mitsui Banking Corporation, and Standard Chartered Bank (Hong Kong) Limited, with $200.0 million each. On March 16, 2026, Polestar announced a $300.0 million equity investment by various purchasers including Crédit Agricole CIB, Vida Finance S.A., Innovator Limited and Proximastar Holdings Company Limited. On March 31, 2026, Polestar announced that Snita Holding B.V. agreed to convert approximately $274.0 million of outstanding debt under the Snita Term Loan Facility into Polestar equity, change the applicable margin to borrowings under the facility from 4.97% into 5.40%, and extend the facility from December 29, 2028 to December 31, 2031. In this regard, the Group continues to expect its long-term financing lines to be provided by a pool of banks and credit lines provided by Chinese and International counterparties. For many of its short- and long-term credit lines provided by Chinese and International counterparties, the Group benefits from either a comfort letter or security that is provided by Geely. Non-GAAP Financial Measures Polestar uses both generally accepted accounting principles ("GAAP", i.e., IFRS) and non-GAAP (i.e., non-IFRS) financial measures to evaluate operating performance and for other strategic and financial decision-making purposes. Polestar believes non-GAAP financial measures are helpful to investors as they provide useful perspective on underlying business trends and assist in period-on-period comparisons. These measures also improve the ability of management and investors to assess and compare the financial performance and position of Polestar with those of other companies. These non-GAAP measures are presented for supplemental information purposes only and should not be considered a substitute for financial information presented in accordance with GAAP. The measures are not presented under a comprehensive set of accounting rules and, therefore, should only be read in conjunction with financial information reported under GAAP when assessing Polestar's operating performance. The measures may not be the same as similarly titled measures used by other companies due to possible differences in calculation methods and items or events being adjusted. A reconciliation between non-GAAP financial measures and the most comparable GAAP performance measures is provided below. Non-GAAP financial measures used by management are Adjusted EBITDA, Free Cash Flow, Adjusted Gross Profit / (Loss) and Adjusted Gross Margin. Adjusted EBITDA is calculated as net loss, adjusted to exclude: •Fair value change - Earn-out rights and Class C Shares. •Finance expense. •Finance income. •Foreign exchange gains (losses) on financial activities, net. •Income tax benefit (expense). •Depreciation and amortization1. •Impairment of property, plant and equipment, vehicles under operating leases, and intangibles assets, net of reversals. •Gains (losses) on disposals of investments2. •Restructuring costs3; and •Unusual other operating income and expenses that are considered rare or discrete events and are infrequent in nature. 1 - Depreciation and amortization include (a) depreciation and amortization capitalized into the carrying value of inventory sold (i.e., part of inventory costs) and (b) depreciation and amortization expense. 2 - Disposals of investments include disposals, by sales or otherwise, of: (a) debt or equity financial instruments issued by another entity that are held as investments, (b) intangible assets, (c) property, plant, and equipment, and (d) groups of assets and liabilities representing disposal groups that were transferred together as part of individual transactions. 3 - Restructuring costs include expenses associated with programs that were planned and controlled by management and materially changed either (a) the scope of a business undertaken by the Group or (b) the manner in which business is conducted. Management reviews this measure and believes it provides meaningful insight into the core business's underlying operating performance and trends, before the effect of any adjusting items. The definition of Adjusted EBITDA was refined in December 2024. Accordingly, Adjusted EBITDA for the year ended December 31, 2023 is recast for the changed definition. For more information regarding the changes in the Adjusted EBITDA definition, see Non-GAAP Financial Measures in the Company's annual report on Form 20-F for the years ended December 31, 2024, 2023 and 2022. Free Cash Flow Free Cash Flow is calculated as cash used for operating activities plus cash used to acquire property, plant and equipment and intangible assets. This measure is reviewed by management and management considers it to be a relevant measure for assessing cash generated by operating activities that are available to repay debts and spend on other strategic initiatives. Adjusted Gross Profit / (Loss) and Adjusted Gross Margin 40 Table of Contents Adjusted Gross Profit / (Loss) is calculated as gross loss, adjusted to exclude: (i) expenses arising from the impairment of property, plant and equipment, vehicles under operating leases, and intangibles assets; and (ii) unusual other items of income or expense that are considered rare or discrete events and are infrequent in nature. Adjusted Gross Margin is calculated as Adjusted Gross Profit / (Loss) divided by revenue. These measures are reviewed by management and management considers them to be useful measures for assessing Polestar's historical operating performance as they facilitate comparison between periods by excluding the non-cash impairment expense, the measurement of which includes significant assumptions related to future periods. Reconciliation of GAAP and Non-GAAP results For the year ended December 31, 2025 2024 2023 Adjusted EBITDA Net loss (2,357,231) (2,049,897) (1,181,875) Fair value change - Earn-out rights and Class C shares (23,391) (129,124) (465,168) Finance expense1 385,190 341,182 213,242 Finance income1 (8,996) (23,879) (32,329) Foreign exchange (gains) losses on financial activities, net1 (50,282) 52,603 (37,236) Income tax benefit (3,692) (9,166) (9,452) Depreciation and amortization 146,932 113,849 135,360 Impairment expense, net of reversals 1,049,851 622,092 339,568 Losses (gains) on disposals of investments 16 4,622 (5,442) Restructuring costs 67,559 — — Unusual other operating income and expense, net2 10,689 (2,345) 25,676 Adjusted EBITDA (783,355) (1,080,063) (1,017,656) 1 - The Foreign exchange (gains) losses on financial activities, net were previously presented under Finance expense in the year ended December 31, 2024, and under Finance income in the year ended December 31, 2023. Refer to Voluntary re-presentation from previous year in Note 2 - Material accounting policies and use of significant judgements and estimates) in the Consolidated Financial Statements for further information. 2 - For the year ended December 31, 2025, the amounts relate to: (i) $1,416 related to net gains on sale of PPE and intangibles; and (ii) $12,105 related to the battery recycling provision expense related to cars sold prior to 2025. For the year ended December 31, 2024, the amounts are related to the reduction in litigation provision, net of insurance. For the year ended December 31, 2023, the amounts are related to the litigation provision expense, net of insurance. For the year ended December 31, 2025 2024 2023 Free Cash Flow Net cash used for operating activities (914,989) (991,209) (1,893,841) Additions to property, plant, and equipment (158,713) (147,894) (137,400) Additions to intangible assets (296,079) (209,101) (435,584) Free Cash Flow (1,369,781) (1,348,204) (2,466,825) For the year ended December 31, 2025 2024 2023 Adjusted Gross Profit / (Loss) Gross loss (1,083,910) (876,167) (410,137) Impairment expense, net of reversals 1,049,851 622,092 339,568 Battery recycling provision for cars sold prior to 20251 12,105 — — Adjusted Gross Profit / (Loss) (21,954) (254,075) (70,569) 1 - As disclosed in Note 22 - Provisions of the Consolidated Financial Statements, during the year ended December 31, 2025, Polestar recognized a provision related to its obligations to recycle batteries in vehicles sold into certain markets, principally countries in the EU and the UK. The provision was recognized for all cars sold since Polestar began selling its BEV vehicles in 2021. This adjustment removes the amount of the provision expense related to the cars sold prior to 2025. For the year ended December 31, 2025 2024 2023 Adjusted Gross Margin Adjusted Gross Profit / (Loss) (a) (21,954) (254,075) (70,569) Revenue (b) 3,058,109 2,034,261 2,368,085 Adjusted Gross Margin (a/b) (0.7) % (12.5) % (3.0) % 41 Table of Contents C. Research and Development, Patents and Licenses Full details of our research and development activities and expenditures are given under the description of the Research and Development, Patents and Licenses in Results of Operations within this Operating and Financial Review and Prospects section as well as under Innovation within Business Overview - Design, Innovation and Sustainability in Item 4.B. D. Trend Information Other than what is disclosed elsewhere in this Report, Polestar is not aware of any trends, uncertainties, demands, commitments, or events for the year ended December 31, 2025, that would reasonably be likely to have a material and adverse effect on revenues, income, profitability, liquidity, or capital resources or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial condition. Please refer to Key Factors Affecting Performance within this Operating and Financial Review and Prospects section for a discussion of known trends, uncertainties, demands, commitments, or events that are reasonably likely to have a material effect on revenues, income, profitability, liquidity, or capital resources that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial condition. E. Critical Accounting Estimates Not applicable - Polestar prepares its Consolidated Financial Statements in accordance with the IFRS Accounting Standards issued by the International Accounting Standards Board ("IASB").