Swedish electric vehicle maker Polestar begins production in US, avoiding high tariffs Reuters

By Abhirup Roy and Marie Mannes

(Reuters) – Swedish electric vehicle (EV) maker Polestar (NASDAQ: ) took a step closer to avoiding major tariffs on Chinese-made cars on Wednesday, when the automaker said it had started production of its Polestar 3 SUV in the United States United.

High tariffs recently imposed by the US and Europe on cars made in China have prompted many automakers to accelerate plans to move parts of their production to other countries.

Polestar, majority owned by Chinese company Geely, manufactures its vehicles in China and exports to overseas markets. The Polestar 3, manufactured at Volvo’s (OTC:) US plant in South Carolina, will be sold to customers in the US and Europe.

“If you look at the volume that we’re going to make of the Polestar 3, of course the majority of that volume will come from the South Carolina plant,” Chief Executive Thomas Ingenlath told Reuters on Tuesday.

Production at the plant is expected to reach peak volume in two months, he said, but declined to disclose Polestar’s capacity at the facility. Deliveries to American customers from the factory will begin next month, followed by deliveries to Europe, Ingenlath added.

Polestar sold 3,555 Polestar 2 sedans, its first battery-powered car, in the U.S. in the first half of the year, according to Kelley Blue Book estimates.

The company also plans to build its Polestar 4 coupe SUVs at a plant in South Korea Renault (EPA:) Korea, part owned by Geely, in the second half of 2024 for Europe and the US Until then, deliveries to the US, which are expected to start later this year, will attract tariffs.

Production in the US and South Korea has been part of Polestar’s plan to expand where it makes its cars for some time.

Production in Europe was also part of his ambition. Ingenlath said the company hopes to partner with an automaker to produce its cars in the region within the next three to five years, similar to its existing partnership with Volvo and Renault.

The shift to U.S. manufacturing comes as high interest rates to fight inflation have soured consumer appetite for electric vehicles, prompting companies including market leader Tesla (NASDAQ: ) to cut prices and lead to job cuts. labor and delaying production plans.

Next, Polestar, which cut jobs earlier this year, will focus on cutting materials and logistics costs and increasing efficiency to control costs to push cash flow to breakeven in 2025, it said Ingenlath.