The automakers may have been granted a tariff reprieve for the moment with Canada and Mexico duties delayed until March, but the writing is already on the wall. Polestar (PSNY), an upstart electric vehicle company owned by China's Geely, is already feeling the pain.
Trump and his economic team levied 10% tariffs on goods coming from China, and while only a few cars come from the People's Republic destined for the US, the tariffs will affect many components and raw materials like steel used to assemble these cars. And this comes on top of the 100% tariff President Biden levied on EVs.
The EV tariff hit pure-play EV maker Polestar hard. The company assembles its popular Polestar 2 at its factory in Chengdu, but a 100% tariff means it's no longer available stateside, Polestar CEO Michael Lohscheller said in an interview with chof360 Finance.
Lohscheller, Polestar’s CEO since October of this year after succeeding longtime chief executive Thomas Ingenlath, nonetheless feels Polestar is in good shape — largely because of its wide manufacturing footprint.
"The way we see it, it's very important that we manufacture locally here in the US,” Lohscheller said. “We have a good business model. We produce locally here in the US. We are just accelerating the start of the Polestar 3 — more cars to come in terms of Polestar 4 and 5. So that's how we position ourselves in this very important market, the United States.”
Polestar currently builds its Polestar 3 SUV at its plant in South Carolina, which it shares with Volvo, also owned by Geely. Building in the US, of course, means no tariffs, and localized production means cheaper assembly and transport costs.
Read more: What are tariffs, and how do they affect you?
While localized production immunizes the company from Trump’s tariffs, not all cars can be built here.
“Obviously, the tariff is something that we take very serious, and it's something which could then potentially be some headwinds,” he said.
The upcoming Polestar 4 sports SUV will be built in South Korea, with whom the US has a strong free trade agreement. The Polestar 5 sports sedan will be built in Europe, however, which might make it susceptible to new levies.
Despite the complex manufacturing footprint, costs associated with developing new models, and somewhat uneven EV demand story here in the US and elsewhere, Polestar is still forecasting a good year.
“So obviously on a global basis, we have the Polestar 2, 3, and 4 [EVs], and with those products, we target a growth rate on the revenue side of 30 to 35%, and also target positive EBITDA for 2025. And that is obviously a big improvement for us because now we have a broader portfolio,” Lohscheller said. “And that helps us with all the efficiencies we were talking about, to target this level of profitability already in 2025.”
Story Continues
Polestar’s new business plan sees that profitability metric being hit later this year, which would be a huge milestone for the company. It previously achieved profitability, but that was due to an accounting change and not because of auto operations.
Looking ahead, the other big addition revealed in Polestar’s updated business plan is the upcoming release of the Polestar 7, which would be a cheaper, compact SUV.
“The compact SUV segment is a big segment; it's actually on a global basis, the fastest growing segment, therefore important also for Polestar as a profit pool, and I think is an important addition to our portfolio.” Lohscheller said of the Polestar 7. “We can position the Polestar brand even broader and the segment is good.”
Expect to see the Polestar 7 in showrooms in 2027, with a price tag in the mid-$40,000 range, likely competitive with sister brand Volvo’s EX-30 compact EV SUV.
Pras Subramanian is a reporter for chof360 Finance. You can follow him on Twitter and on Instagram.
Read the latest financial and business news from chof360 Finance
