Polestar Begins US Production to Sidestep Chinese EV Tariffs

Swedish electric vehicle maker Polestar has started production of its Polestar 3 SUV in the United States, marking a significant step in avoiding major tariffs on Chinese-made cars, according to Reuters.

Polestar Shifts Production Strategy

Polestar, majority-owned by China’s Geely, has been manufacturing its vehicles in China and exporting them to overseas markets. However, recent steep tariffs imposed by the US and Europe on Chinese-made cars have prompted many automakers, including Polestar, to accelerate plans to relocate parts of their production.

The Polestar 3, now being manufactured at Volvo’s plant in South Carolina, will cater to customers in both the US and Europe. Thomas Ingenlath, Polestar’s CEO, stated:

“If you look at the bulk of volume that we will produce of Polestar 3, of course, the majority of that volume will be here coming out of the South Carolina factory.”

Production and Delivery Timeline

Ingenlath expects the South Carolina plant to reach full production capacity within two months. While he didn’t disclose specific production numbers, he confirmed that deliveries to US customers will commence next month, followed by European deliveries.

Future Production Plans

Polestar isn’t stopping with US production. The company plans to build its Polestar 4 SUV coupes at a Renault Korea plant in South Korea, partly owned by Geely, starting in the second half of 2024. This production will target both European and US markets.

Additionally, Polestar aims to partner with an automaker to produce its cars in Europe within the next three to five years, mirroring its existing partnerships with Volvo and Renault.

Market Challenges and Cost-Cutting Measures

The EV market has faced headwinds due to high interest rates dampening consumer appetite. In response, Polestar, like other EV makers including Tesla, has implemented job cuts and is focusing on reducing material and logistics costs to improve efficiency. The company aims to reach cash flow break-even by 2025.

EVXL’s Take

Polestar’s move to US production highlights the growing importance of localized manufacturing in the EV industry. As we’ve seen in recent Tesla news, adapting to market conditions and regulatory environments is crucial for EV makers. Polestar’s strategy of diversifying production across multiple countries could serve as a model for other EV manufacturers looking to navigate complex global trade landscapes while maintaining competitive pricing.