Polestar (NASDAQ:PSNY) stock is in focus today on speculation that the firm could be hit hard as President Joe Biden and his administration launch tariffs against Chinese electric vehicles (EVs).
Indeed, The Wall Street Journal reports that the Biden administration will quadruple tariffs on Chinese-made EVs. Other green energy goods like solar cells and batteries are being targeted as well.
Based in Sweden but backed by a Chinese firm, Polestar is one of the few China-related brands with a stake in the U.S. market. PSNY stock is up about 3% as of this writing at around $1.31 per share and a market capitalization of roughly $2.7 billion.
Polestar, Geely and the U.S. EV Space
The Inflation Reduction Act included large investments in the EV sector, subsidizing the purchase of American-made cars and batteries. The aim was to take back climate-related markets where China has become dominant in recent years. There is a big market for batteries, with U.S. battery storage capacity expected to double this year.
U.S. car companies, however, have been reluctant to increase their EV investments. Ford (NYSE:F) recently cut its battery orders and said that it lost $100,000 for every EV sold in the first quarter of this year, per Jalopnik.
Meanwhile, Polestar is controlled by Geely (OTCMKTS:GELYY), one of China’s largest automakers. Geely also controls Volvo (OTCMKTS:VLVYY) and Lotus, the latter of which is reportedly planning its own U.S. entry.
Polestar had been planning on assembling some of its cars in South Carolina, to earn the subsidies. The EV firm recently backed off those plans. The company recently showed off its Polestar 3 and Polestar 4 models in New York.
Just last week, Geely also held an initial public offering (IPO) for its Zeeker (NYSE:ZK) spinoff. Zeeker is up about 10% as of this writing, trading for $31 per share.
The move against Chinese companies could benefit South Korean firms like Hyundai (OTCMKTS:HYMTF) the most. Hyundai is building an EV plant in Georgia. Similarly, South Korea’s SK Hynix already operates a battery facility in Commerce, Georgia.
What Happens Next?
The Biden plan, which aims to improve U.S. competitiveness against China, is also helping South Korean firms. Shares of Hyundai stock are up 33% so far this year.
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.
