Polestar Navigates Tariffs with Localized Production Strategy
Polestar, an electric vehicle (EV) manufacturer owned by Geely, has been impacted by the 10% tariffs imposed by the Trump administration on goods from China and the 100% tariff on EVs by President Biden.
Impact on Polestar 2
The tariffs have significantly affected Polestar, as its popular Polestar 2 model is assembled in China. Due to the 100% tariff, the Polestar 2 is no longer available in the United States, according to CEO Michael Lohscheller.
Localized Production Strategy
To mitigate the impact of tariffs, Polestar is accelerating its localized production efforts. The company assembles its Polestar 3 SUV in South Carolina and plans to build the Polestar 4 sports SUV in South Korea, a country with a free trade agreement with the US. However, the Polestar 5 sports sedan will be built in Europe, which may expose it to potential levies.
Growth Forecast
Despite these challenges, Polestar forecasts a strong year in 2023, targeting a 30-35% revenue growth rate and positive EBITDA by 2025. The company credits its broader product portfolio and cost efficiencies for this optimism.
Upcoming Polestar 7
Polestar's business plan includes the launch of the Polestar 7, a compact SUV aimed at expanding the brand's reach. The Polestar 7 is expected to be released in 2027 with a price point in the mid-$40,000 range, competing with Volvo's EX-30 compact EV SUV.