April 17 (Reuters) - Sweden's Polestar on Friday reported a sharp jump in fourth-quarter revenue and a smaller loss, as the electric vehicle maker ramped up production and cut costs to cater to growing European demand.

The company's revenue jumped 54% to $887 million for the three months ended December 31 from a year ago. Net loss narrowed to $799 million, compared with a loss of $1.18 billion in the same quarter in 2024.

Polestar has shifted its focus to its home market of Europe over the past year, where demand for its lineup of battery vehicles has been strong, while other core markets including the U.S. have seen sluggish performance.

Economic uncertainty, sparked by the turmoil in the Middle East and the fallout from U.S. President Donald Trump's tariff policies, has also hampered Polestar's international expansion plans and contributed to its Europe-focused strategy.

The company expects market conditions to become more challenging "amid ongoing geopolitical developments", CEO Michael Lohscheller said.

Polestar did not provide any financial forecasts apart from the previously disclosed retail sales volume growth, which is expected to increase at low-double-digit rates.

It has been aggressively cutting costs by reducing headcount, optimizing its manufacturing processes and rejigging supply chains. The company had 1,686 employees at the end of 2025, compared with 2,547 at the end of 2024.

Polestar expects to publish first-quarter financial results on May 7. Its cash position was around $1.16 billion at the end of 2025.

Adjusted gross margin for the fourth quarter was 1.9%, compared with negative 39% in 2024.