Polestar is in the middle of an international trade war. Growing competition from Tesla and Chinese rivals and a slowing global electric vehicle market are not good for business. Even worse are the huge taxes that are set to be imposed on the entire group of Polestar cars made in China. The U.S. government raise tariffs on electric vehicles from China from 25 to 100 percent, and in Europe the threat 38 percent tax increase July 4 is also approaching. In May, China suggested that respond with a 25 percent tariff increase in cars with huge engines, if the US decides to do so.
For rivals including Rivian, Saudi-backed Lucid and Tesla, the market slowdown is bad news. But for Modern York-listed Polestar, whose mainstay, the Polestar 2, is made entirely in China, it could be disastrous. The Swedish-founded company confirmed to WIRED that it believes its electric hatchback, which price starts at $79,900will certainly be affected when these tariffs go into effect. Polestar told WIRED that it is currently “digesting the legislation and its options” following the news.
A company that regains financial liquidity after ownership and management restructuring, round of job cutsdisappointing sales results and a delicate balance sheet for 2023 — the company faces the complex task of growing its business and repaying loans.
There has been no public announcement of any plans to secure the Polestar 2, the company’s flagship EV that accounts for the huge majority of its sales. The Polestar 2 is already more than $29,000 more high-priced than Tesla Model 3 (which is made in Shanghai and starts at around $50,600) and is more high-priced than the $77,400 Lucid Air Pure and the $75,900 Rivian R1S — all of which compete in the same category.
Polestar declined to comment on how much the tariffs would affect the price of its vehicles. But the company does have a plan that could support its later models: It says it will follow through on its 2021 plans to produce the Polestar 3 in South Carolina, while the Polestar 4 will be built in South Korea starting in the second half of 2025. (The Polestar 4 is already available in China and is currently discounted there, but it won’t reach Europe until the end of this year.)
Andy Palmer, a former Nissan COO and Aston Martin Lagonda CEO with four decades of experience in the car industry, says Polestar is “a long way from getting out of trouble” even if it manages to get through the tariffs, which are also expected to affect electric vehicle batteries. “Strict cash management will continue until we see EV adoption picking up in line with previously anticipated demand,” he says.
Latest Polestar sales results, released on Tuesday, states that it has delivered 20,200 cars so far in 2024, mostly in the second quarter of the year. Just 200 of those cars were Polestar 4s, the company told investors. Overall, the numbers represent a marked improvement over preliminary Q1 results, which showed sales of the Polestar 2 were down 40 percent compared with the same period a year earlier, with just over 7,200 vehicles sold in the first three months of 2024, the weakest performance since the third quarter of 2022. Polestar CEO Thomas Ingenlath said in a statement that the company was showing “strong momentum” and that it expected revenue to improve significantly in the second quarter of the year.