Polestar bets on US, Korea to avoid made-in-China EV tariffs

Polestar Automotive Holding’s new business plan banks on higher margins and lower costs from two new electric vehicles that won’t face punitive US import fees — unlike the Chinese EVs it currently sells.

The EV startup backed by China’s Zhejiang Geely Holding Group Co. and Volvo Car plans to debut a US-manufactured Polestar 3 and a South Korea-built Polestar 4 over the next two years, both of which will avoid a 27.5% US tariff imposed on its China-made Polestar 2.

“Polestar 2 definitely is in a much different and, let’s face it, much tougher situation,” Thomas Ingenlath, Polestar’s chief executive officer, said in an interview Thursday.

Ingenlath reaffirmed plans for the start of production of the Polestar 3 SUV at a Volvo Car factory near Charleston, South Carolina, next summer. The Polestar 4 SUV will be manufactured from late 2025 at a Renault SA plant in South Korea, with some of those vehicles earmarked for export to the US, the company said Thursday.

No Price War

US electric-vehicle market leader Tesla Inc. has rocked the industry with a series of price cuts that have eroded its margins in a quest for faster growth. But Ingenlath said he isn’t fazed by Tesla CEO Elon Musk’s tactics and has no plans to slash Polestar’s sticker prices, which average about $60,000 to $100,000.

“We have expensive cars and we have very demanding customers. They look for the greatness of the product and technology,” he said. “Price is, in a way, something that comes second. We can’t ignore it — we have to be competitive at those prices — but we certainly aren’t going into a price war with Tesla.”

Polestar needs an additional $1.3 billion in capital to meet its goal of breaking even on a cash-flow basis by 2025. Ingenlath said raising those funds is “very solvable next step” with a combination of debt and equity, and that the company is looking for new investors outside of Geely and Volvo.

Polestar was previously a subsidiary of Volvo, which itself is owned by Geely.

Chinese Smartphone JV

Ingenlath also said Polestar is on track to launch a smartphone in China with joint-venture partner Xingji Meizu, a Chinese tech company owned by Geely. 

“The phone is clearly linked to our Polestar OS,” he said, a reference to an operating system it will share with the Chinese-market Polestar 4 model.