Shares of Gores Guggenheim (NASDAQ:GGPI), the special purpose acquisition company (SPAC) set to merge with Polestar, are surging higher following an order from Hertz (NASDAQ:HTZ). The vehicle rental services company announced this morning that it had ordered 65,000 vehicles from Polestar. The purchases are set to be fulfilled over the next five years. Furthermore, most of the vehicles ordered will be in the form of the Polestar 2.
Why Is Polestar Stock Up Today?
This is huge news for Polestar, as the electric vehicle (EV) company sold a total of 29,000 vehicles last year. Automotive News reports that the order could generate more than $3 billion of revenue for Polestar upon completion. The Polestar 2 will be available in North America and Australia before the end of the year on Hertz’s network. In addition, the vehicle will be available in Europe by this spring.
Hertz has previously stated that it plans to build the largest fleet of EVs in North America. Last October, the company announced that it had ordered 100,000 Tesla (NASDAQ:TSLA) vehicles. Hertz CEO Stephen Scherr believes the Polestar order aligns with the company’s plan. He added, “By working with EV industry leaders like Polestar, we can help accelerate the adoption of electrification while providing renters, corporate customers and rideshare partners a premium EV product, exceptional experience and lower carbon footprint.”
What’s Next for Polestar?
As a refresher, the EV company has plans to merge with SPAC Gores Guggenheim. The transaction is expected to be completed during the second half of the year.
On top of that, Polestar may have a head start when compared to other early stage EV companies. This is because Polestar was created as a joint venture between Volvo (OTCMKTS:VLVLY) and Chinese automaker Geely (OTCMKTS:GELYF). This will allow Polestar to tack on the expertise and technology of its older and more experienced backers. As SeekingAlpha reports, the partnership should “allow the company to avoid the production and quality control issues that plagued Tesla during its early production ramp-up stage.”
The next vehicle that Polestar expects to launch is the Polestar 3, a premium SUV. Production for the EV is expected to begin this year, with an estimated starting price at $75,000. The Polestar 3 will also utilize a brand new EV platform.
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.