Polestar Automotive, the Swedish electric automaker, announced on Thursday that it would cut its headcount by 10% and lower its production guidance for 2023. 

The company attributed these decisions to a difficult industry environment and a delayed production start for its Polestar 3 model.

Polestar Automotive has revised its production target for 2023, expecting to manufacture 60,000 to 70,000 cars, compared to the previously anticipated 80,000, due to the delayed production start for its Polestar 3 and a challenging environment for the industry.

EV startups have experienced a challenging first quarter due to rising competition from both Chinese rivals and established brands. Furthermore, the ongoing price competition started by Tesla and high-interest rates have added to the financial pressures faced by these already cash-strapped startups.

Lucid and Fisker are among the electric vehicle companies that have also reduced their production guidance. In March, Lucid even announced a layoff of 18% of its employees.

The production start for Polestar 3 has been delayed until the first quarter of 2024 from the initial mid-2023 start, as per the announcement by Polestar. The delay is attributed to Volvo Cars, which produces Polestar cars, needing to conduct additional software development and testing, according to the company.

Despite facing financial difficulties, Polestar received $1.6 billion in funding in November from its two major shareholders, Volvo Cars and PSD Investment, controlled by Li Shufu. However, the automaker will require additional funding to sustain operations in the coming years.

In early trading on Thursday, PSNY's shares have dropped by 10.32%.