Polestar (NASDAQ:PSNY), the Swedish electric vehicle (EV) company controlled by China’s Geely (OTCMKTS:GELYF), has begun production of its Polestar 4 with deliveries due to start in December. Polestar cars destined for North America will be made at a Renault (OTCMKTS:RNLSY) plant in South Korea while others will be made at a Geely plant in China.
PSNY stock is currently up more than 4% on the news. Shares opened on Nov .15 at $2.23 per share and a market capitalization of around $4.6 billion on estimated 2023 sales of $2.7 billion.
PSNY Stock: Geely’s Global Effort
The Polestar 4 represents a “staggering feat of globalization” meant to get around U.S. policies against Chinese goods. Federal tax credits under the Inflation Reduction Act can be applied on batteries from South Korea. The move also “helps avoid a 25% U.S. import tariff currently applied to models from China.”
The most controversial part of the design is the lack of a rear window. The Polestar 4 relies on a camera instead.
Polestar recently cut its production guidance for 2025. The company now hopes for gross margins “in the high teens” from total annual volume of 155,000 vehicles to 165,000 vehicles. That’s up from 60,000 cars to be delivered this year.
For the third quarter, Polestar reported a net loss of $155 million on revenue of $613 million.
In addition to the Polestar 4, the company still expects to start making the Polestar 3 early next year. The vehicle will be based on a platform shared with parent Volvo (OTCMKTS:VLVLY). The Polestar 3 will also be made at a plant in South Caroina. A Polestar 5 has already been announced for 2025 as well.
What Happens Next?
In 2025, the EV market is going to be very crowded, with Chinese, German and Japanese companies all planning to ramp up production. Expect bargains at dealer showrooms and some losers in the stock market.
On the date of publication, Dana Blankenhorn 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.