Polestar Automotive (NASDAQ:PSNY) stock is rising as it prepares to report results on March 2.
American EV makers Fisker (NYSE:FSR) and Rivian (NASDAQ:RIVN) also rose in pre-market trading on Feb. 27. Bulls believe their opportunity to reach buyers is approaching. Lucid (NASDAQ:LCID), which recently cut back its production targets and pre-order numbers, is not joining the bull run.
Polestar is controlled by China’s Geely Holding Group (OTCMKTS:GELYY). Geely bought Sweden’s Volvo in 2010. The Polestar brand was launched in 2015. Geely is adding Lidar systems, which help in automated navigation, to its Polestar models.
Polestar, Geely, and the Chinese Luxury Market
Chinese and American electric car makers are copying the strategy of Tesla (NASDAQ:TSLA), focusing first on the luxury segment of the car market in Europe and the U.S. The difference for the Chinese is that they have achieved mass-market scale in their home market.
Geely is beginning to push its European names aside, with plans to launch seven new luxury electrics under “Geely Yinhe” over the next two years. (Yinhe is Chinese for Galaxy.)
About 22% of China’s car market is now electric. Demand is replacing subsidies as the motivation. Over 5.2 million fully electric cars were sold there in the first 11 months of 2022.
Geely holds a 5.5% share in China, against 7.6% for Tesla and 10.8% for state-backed SAIC Motor, which has a joint venture with General Motors (NYSE:GM). BYD (OTCMKTS:BYDDY), which has yet to enter the export market, dominates in China, with a 30% market share. BYD started as a battery maker, boosted by investment from Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B).
BYD’s dominance of its home market has pushed rivals like Geely toward export. In addition to Volvo, Geely also owns the Lotus brand.
PSNY Stock: What Happens Next?
Polestar’s success is bad news for Fisker, Rivian, and Lucid because Geely has achieved Tesla-like mass production in its home market. In contrast, American companies have yet to achieve mass production.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.