Polestar shares will debut with the “PSNY” ticker on Friday, becoming the latest electric vehicle manufacturer to be released through a merger with a special-purpose acquisition company, or SPAC.
Polestar said its shares will begin trading on the Nasdaq Stock Exchange after completing its merger with SPAC Gores Guggenheim. Polestar CEO Thomas Ingenlath said the company will use the approximately $ 850 million raised from the deal to fund its three-year plan to build new vehicles and ultimately be profitable.
But Ingenlath said Polestar, which started as a joint venture between Sweden’s Volvo Cars and Chinese car giant Geely in 2017, has advanced beyond the starting state.
“We make ourselves public as an operational and successful business, not to raise capital to build a business,” Ingenlath told CNBC in a recent interview. “It’s because the next three years will be super fast growth. The company is ready for that with the product portfolio.”
SPAC deals have become a more popular way for companies to go public in recent years. The required disclosures are simpler than those of a traditional initial public offering. Unlike a traditional IPO, companies involved in an SPAC merger may present future projections to investors, which may help justify a high valuation. But there is no guarantee that these predictions will come true.
So far, most SPAC mergers with electric vehicle companies have not worked well for investors. Even the relatively most successful cases of Lucid Group, Fisker and Nikola are currently trading at 67%, 69% and 92% below post-merger highs, respectively. Truck manufacturer EV Rivian, which went public through a traditional IPO, has also had problems. Its shares have fallen 84% from the maximum after the IPO.
But Polestar could 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 operation in China and an assembly line that will begin production later this year in a South Carolina factory shared with Volvo.
Over the next three years, the company plans to add three vehicles to its current model, the compact crossover Polestar 2 built in China. The additions are a large SUV, the Polestar 3; a medium-sized crossover, the Polestar 4; and a large sedan, the Polestar 5, which aims to serve as the brand’s flagship vehicle.
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 roadmap to lead the company to annual sales of about 290,000 vehicles.
Ingenlath said Polestar may need to raise more cash before it becomes profitable, a milestone it hopes to reach before 2025. If so, it said the company will likely issue bonds instead of selling more shares.
So far, Ingenlath said, the company’s plan is on track. It has received more than 32,000 orders for Polestar 2 since the beginning of the year, with these orders coming from 25 different countries. Polestar also received an order from car rental giant Hertz for 65,000 vehicles over the next five years, an agreement Ingenlath said it aims to give consumers a chance to test the company’s electric vehicles.
Polestar’s plan is to operate sales and service networks in 30 countries by the end of next year, but Ingenlath said the company would likely reach that milestone sooner.