🧐 ProPicks AI October update is out now! See which stocks made the listPick Stocks with AI

Swedish EV maker Polestar starts U.S. production, avoiding heavy tariffs

Published 08/15/2024, 11:35 AM
Updated 08/15/2024, 11:46 AM
© Reuters. A guest looks at the Polestar 3 SUV during the New York International Auto Show Press Preview, in Manhattan, New York City, U.S., March 27, 2024. REUTERS/David Dee Delgado/File Photo
RENA
-
VLVLY
-
PSNY
-

(This Aug.14 story has been corrected to fix the timeline for Polestar (NASDAQ:PSNY) 4 South Korean production to mid 2025 from the second half of 2024, in paragraph 7)

By Abhirup Roy and Marie Mannes

(Reuters) - Swedish electric-vehicle (EV) maker Polestar moved one step further in avoiding major tariffs imposed on Chinese-made cars on Wednesday when the automaker said it began production of its Polestar 3 SUV in the United States.

Steep tariffs recently imposed by U.S. and Europe on cars made in China have prompted many automakers to speed up plans to move parts of their production to other countries.

Polestar, majority owned by China's Geely, has been manufacturing its vehicles in China and exporting to overseas markets. The Polestar 3, made in Volvo (OTC:VLVLY)'s U.S. plant in South Carolina, will be sold to customers in the U.S. and Europe.

"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," Chief Executive Thomas Ingenlath told Reuters on Tuesday.

Production at the plant was expected to reach full volume in two months, he said, but declined to disclose Polestar's capacity at the facility. Deliveries to U.S. customers from the plant will begin next month followed by deliveries to Europe, Ingenlath added.

Polestar sold 3,555 Polestar 2 sedans, its first battery powered car, in the U.S. during the first half of the year, according to Kelley Blue Book estimates.

The company also plans to build its Polestar 4 SUV coupes at a South Korean plant of Renault (EPA:RENA) Korea, part owned by Geely, in mid 2025 for Europe and the U.S. Until then, deliveries in the U.S, expected to start later this year, will attract tariffs.

The U.S. and South Korea production have been part of Polestar's plan for some time to spread out where it makes its cars.

Production in Europe has also been part of its ambition. Ingenlath said that the company hope to partner with an automaker to produce its cars in the region in the next three to five years, similar to its existing partnership with Volvo and Renault.

© Reuters. A guest looks at the Polestar 3 SUV during the New York International Auto Show Press Preview, in Manhattan, New York City, U.S., March 27, 2024. REUTERS/David Dee Delgado/File Photo

The transition to U.S. production comes as high interest rates to tackle inflation have soured consumer appetite for EVs, prompting companies, including market leader Tesla (NASDAQ:TSLA), to slash prices and leading to job cuts and delayed production plans.

Going ahead, Polestar, which cut jobs earlier this year, will focus on reducing the cost of materials and logistics, and increase efficiency to reign in costs in order to push cash flow to break even in 2025, Ingenlath said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.