Polestar is the latest electric vehicle company to go public and is listed on its Nasdaq stock exchange on Friday after successfully merging with a special-purpose acquisition company, or SPAC. The company plans to use the $ 850 million in fresh capital to fund its three-year plan to manufacture several new electric models and be profitable.
The Swedish company, which is a joint venture between Volvo and its parent company Geely, goes public amid wider uncertainty over electric vehicle stocks. Several electric vehicle startups have followed the SPAC route to be listed on the stock exchange only to see their stock price tank after the first setbacks.
Polestar is a little different as it has been selling and delivering its Polestar 2 fastback electric sedan to customers in the US, Europe and China since late 2020. The company’s next electric vehicle, the Polestar 3 SUV, will debut in in October 2022 and will be manufactured in the US. And, recently, it has reached an estimated deal worth more than $ 3 billion to sell 65,000 vehicles to Hertz.
“This is a very proud time for the entire Polestar team,” Thomas Ingenlath, CEO of Polestar, said in a statement. “We will now open a new chapter in our history that can be summed up in one word: growth.”
Polestar said it has received 32,000 orders for Polestar 2, up 290 percent from last year’s order numbers. The company aims to sell 295,000 vehicles a year by 2025, 10 times the amount it sold in 2021.
SPAC offerings increased in popularity during the pandemic, especially for electric and autonomous vehicle companies. Fewer disclosures are required than traditional initial public offerings, and startups can present prospective projections to investors, which can help justify high valuations.
SPAC’s offerings increased in popularity during the pandemic
There have been some notable bugs. Lordstown, Canoo and Nikola are among the electric vehicle companies that have hit a few speed bumps after going public. There is a feeling that, in addition to taking advantage of the SPAC boom, these startups have been left to meet the demands of listing on a major stock exchange.
Even electric vehicle companies that have opted for the more traditional OPI route have experienced turbulence. Rivian saw the price of its shares fall after the first stumbles on prices and deliveries of its first electric vehicle, the R1T electric truck.
Polestar’s ties with Volvo and Geely probably make it easier to sell to investors than other less well-connected electric vehicle startups. The company has positioned itself as a competitor to Tesla, emphasizing sleek, premium vehicles made from sustainable, vegan materials.
By merging with billionaire-funded “blank check” company and “serial SPAC sponsor” Alec Gores and investment bank Guggenheim Partners, Polestar has said it will have a “business value” of $ 20 billion . The deal will also allow Polestar a large amount of cash: $ 800 million from the Gores Guggenheim Trust Account and $ 250 million in cash from private equity financing (PIPE) “anchored by top institutional investors level, ”the company says.
These other investors include “Volvo Car Group and subsidiaries of Geely President Eric Li” and actor and activist Leonardo DiCaprio, among others, Polestar says. It is the largest blank check merger in the electric vehicle sector since Lucid Motors reached a $ 24 billion deal in February.
The company split from Volvo in 2016 as its performance sub-brand, but has since reformulated itself as a brand only for electric vehicles. Polestar has only launched two vehicles so far: the $ 155,000 Polestar 1 hybrid coupe and the Polestar 2 sedan. In addition to the Polestar 3, the company also plans to launch a compact SUV (the Polestar 4) in 2023 and the Polestar sports sedan. 5 (née Precept) in 2024. The company also introduced a sleek roadster concept called Polestar O2 and is putting its high-performance version of the Polestar 2 into limited production.
Photograph by Andrew Hawkins / The Verge