Polestar, the Swedish electric vehicle manufacturer and Tesla competitor, has announced plans to produce its vehicles in Europe for the first time. The shift to local production comes as the brand seeks to mitigate the high costs of shipping from Asia and avoid the European Union’s recently imposed tariffs on Chinese-manufactured electric vehicles.
“The costs are significantly lower than shipping cars around the world,” said Polestar CEO Michael Lohscheller, adding that local production offers protection from EU tariffs. While Polestar currently builds its cars in China and the U.S., the exact location and partner for the new European facility remain undecided. The Polestar 7, designed as an SUV, will mark the company's debut in European manufacturing.
Polestar intends to expand its presence across Europe, including major markets like Germany and France. The company plans to increase its physical footprint, moving beyond its online sales model by partnering with approximately 300 dealerships worldwide.
The EV maker faced a tough 2024, with a 15% drop in sales, totaling 44,851 vehicles. Shares fell over 10% following a lowered sales forecast for the year. However, Lohscheller expressed confidence in a strong recovery, targeting annual delivery growth of 30-35% by 2027 and aiming for profitability in 2025.
To stabilize its finances, Polestar implemented significant cost-cutting measures, including a 25% reduction in its workforce, eliminating around 600 jobs.
Polestar faces uncertainty in the U.S. market after the federal government announced restrictions on the sale of connected cars produced by Chinese-controlled automakers, effective from 2027. Despite assembling cars in South Carolina, Polestar’s majority ownership by the Chinese Geely Group puts it at risk. Lohscheller remains optimistic, stating, “We will find solutions,” while reaffirming the importance of the U.S. market.
Polestar plans to achieve financial independence by 2027, allowing it to self-finance investments. Revenue from the sale of CO₂ certificates is expected to contribute significantly, with projections in the hundreds of millions this year.
