It’s almost as if every few months there is a new electric vehicle that’s launching. It is in this environment that Polestar (NASDAQ:GGPI) is completing its “de-SPACing” process. The electric brand spun off from Volvo (OTCMKTS:VLVLY) in 2017. Polestar has been in the market for a while yet is now only starting to gain real traction with the release of its first mass-produced line – the Polestar 2. All of this has helped put GGPI stock in the spotlight more recently.
So is the stock a buy today? Let’s find out!
As far as the company’s vehicle is concerned, most that I’ve seen on the Polestar 2 can be summarized as “solid if unspectacular.” The company obviously got its inspiration from pioneer Tesla (NASDAQ:TSLA). It is trying to replicate the overall “vibe” of its competitor’s vehicles.
In fact, the Polestar 2 is targeted to be a direct competitor of the Tesla Model 3.
The Polestar 2 Is a Solid Vehicle
Even if it’s not the most enticing vehicle, Polestar’s main selling proposition is that it is trying to make reliable cars without relying on gimmicks. While YouTubers get a kick out of “powertrain modes” and calculating 0-60mph times, Polestar management is just focused on building a dependable car.
The car even uses an old-fashioned key that you need to enter and turn to start the vehicle. It feels very old-fashioned now, especially in the EV industry.
According to Topgear’s review of the vehicle: “We love the Polestar 2 because it’s handsome, the build quality will give Audi drivers PTSD, and there’s a real sense of common sense about the car – that it’s been designed to work seamlessly, not to wow you with gimmicks then wind you up further down the line.”
While not all reviewers love the Polestar 2 design, most appreciate its practicality.
Polestar Is a Good Alternative to Tesla
Polestar has a few advantages over its rivals because of its business relationships, and this is part of the appeal to GGPI stock.
For example, the company is jointly owned by Volvo and its parent company Geely (a major OEM in the Chinese market). Geely has a full-year sales target for 2022 of 1.65 million vehicles. The vast majority of these vehicles are sold in China but the company is making a push to other Asian markets as well.
I suspect Polestar would not have as many production issues as many of its start-up rivals given the backing of two major OEMs. Recall that even Tesla had to go through some very painful “growing pains” as it ramped up its scale. Polestar would be able to produce a solid build car right from the get-go by relying on the manufacturing capabilities and expertise of its parent companies.
This manufacturing capability is seen in the pricing of the Polestar 2. The single-motor version of the Polestar will retail for $47,200. Furthermore, unlike Tesla, Polestar qualifies for the $7,500 federal EV tax credit. This makes the Polestar significantly cheaper than the Tesla Model 3, which starts at $48,190 and is no longer eligible for a tax credit.
Bottom Line on GGPI Stock
The Polestar is certainly shaping up to be a contender in the EV space. Now that the deal is about to finally close you can see GGPI stock start to form a solid base. There’s a chance that GGPI could pop once the deal closes. Either way, over the long term, I see Polestar emerging as a contender in the EV space. This is one EV company to keep an eye on.
On the date of publication, Joseph Nograles held a LONG position in GGPI stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
