What’s going on with Gores Guggenheim (NASDAQ:GGPI) stock today? As a refresher, the special purpose acquisition company (SPAC) agreed to merge with electric vehicle (EV) maker Polestar last year at a valuation of roughly $20 billion. Currently, Polestar is owned by Volvo (OTCMKTS:VLVLY), which is owned in turn by Chinese automaker Geely (OTCMKTS:GELYF).
Today, shares of GGPI stock closed higher by about 2% in response to an easing of lockdowns in Shanghai, China. Polestar manufactures the Polestar 2 at a production facility located in Chengdu, which is about 1,000 miles from Shanghai. However, fears of a lockdown spillover to Chengdu have put investors of GGPI stock on edge.
Here’s what investors should know about Polestar moving forward.
Why Is GGPI Stock in the Spotlight Today?
Today, Tesla (NASDAQ:TSLA) announced that Chinese officials have given the company permission to resume production at its Shanghai facility. This is great news for Polestar. It signifies that lockdowns are easing in China instead of spreading. Yesterday, new Covid-19 cases in Shanghai totaled 19,442, down from 21,395 the day before. Shanghai is also “home to the world’s largest port.” Further lockdowns of the city could wreak havoc on supply chains for companies of all types.
In recent Polestar news, the EV company announced it had received a 65,000 vehicle order from Hertz (NASDAQ:HTZ). The order will be fulfilled over the next five years, providing Hertz customers with an alternative to Tesla EVs. The two parties did not share the financials of the purchase. However, the Polestar 2 currently starts at a little over $45,000. According to Bloomberg, the vehicle order would generate sales of roughly $3 billion “if Hertz pays at or close to that price.”
Hertz CEO Stephen Scherr commented the following on the deal:
“It is our objective to build the largest fleet of electric vehicles, certainly in North America […] We felt Polestar was at the right place and at the right level of maturity.”
What’s Next for Polestar?
Looking forward, Polestar expects to produce 290,000 EVs per year by 2025. This year, it also expects to begin production of the Polestar 3 SUV. This vehicle will be manufactured in the United States, unlike the Polestar 2. CEO Thomas Ingenlath also expects the Polestar 3 to be a “flagship” model for the company.
Volvo expects to invest $118 million in the EV’s production at its South Carolina plant. All told, Polestar’s unique ownership by established automakers gives it a massive advantage over competitors like Lucid (NASDAQ:LCID) and Rivian (NASDAQ:RIVN). Essentially, Polestar can rely on its parent companies for guidance and resources as needed.
The SPAC merger between Gores Guggenheim and Polestar is expected to close in the first half of 2022.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
