Swedish EV startup Polestar will supply 65,000 vehicles to Hertz over five years, the two companies announced on April 4, 2022.
Shares of Polestar are set to debut Friday under the ticker “PSNY,” making it the latest electric vehicle maker to go public through a merger with a Special Purpose Acquisition Company, or SPAC.
Polestar said that its stock will begin trading on the NASDAQ exchange after SPAC completes its merger with Gorse Guggenheim. Polestar CEO Thomas Ingenlath said the company will use about $850 million raised from the deal to finance its three-year plan to build new vehicles and eventually become profitable.
But Ingenlath said Polestar, which began in 2017 as a joint venture between Sweden’s Volvo Cars and Chinese auto giant Geely, has Startup progressed from position,
“We go public as an operating and successful business — not to raise capital to build a business,” Ingenlath told CNBC in a recent interview. “That’s because the next three years will be the super-fast growth the company has made up for with its product portfolio.”
SPAC deals have become a more popular way for companies to go public in recent years. The required disclosures are simpler than in a traditional initial public offering. Unlike traditional IPOs, companies participating in a SPAC merger are allowed to submit forward-looking estimates to investors, which can help justify a higher valuation. But there is no guarantee that those predictions will be true.
So far, most SPAC mergers with electric vehicle companies haven’t gone down well for investors. even relatively successful cases Lucid Group, fiskerAnd Nikolas Currently 67%, 69% and 92% respectively are trading below their post-merger highs. EV Truck Manufacturer rivian, which went public through a traditional IPO, has also struggled. Its shares are down 84 per cent from their post-IPO highs.
But Polestar can have several advantages over competitors. Volvo Cars still owns 48% of the company, and Polestar already has more than 55,000 vehicles on the road in China, Europe and the US. It has a factory in China up and running and an assembly line set to begin production later this year. A South Carolina factory shared with Volvo.
Over the next three years, the company plans to add three vehicles to its existing model, the China-made compact Polestar 2 crossover. The additions are a large SUV (Polestar 3), a mid-sized crossover (Polestar 4) and a large sedan that is intended to serve as the brand’s flagship vehicle (Polestar 5).
All will be fully electric and all will be offered in the US, Europe and China. Polestar plans to build its vehicles in all three regions. By the end of 2025, Ingenlath expects Polestar’s three-year road map to lead the company to annual sales of approximately 290,000 vehicles.
Ingenlath said Polestar may need to raise more cash before it becomes profitable — a milestone it expects to reach before 2025. If so, he said the company would issue bonds instead of selling more stock.
So far, Ingenlath said the company’s plans are on track. It has received over 32,000 orders for Polestar 2 since the beginning of the year, and these orders have come from 25 different countries. Polestar has also received orders from rental car maker Hertz 65,000 vehicles in the next five yearsOne deal Ingenlath said is primarily intended to give consumers the opportunity to try out the company’s EVs.
By the end of next year, Polestar plans to operate a sales and service network in 30 countries. But Ingenlath said the company will reach that milestone soon.