Shares of Polestar are set to go public under the “PSNY” symbol on Friday, making it the latest electric vehicle maker to go public through a merger with a Special Purpose Acquisition Company, or SPAC.
Polestar said its stock will start trading on the Nasdaq after it completed its merger with SPAC Gores Guggenheim. Polestar CEO Thomas Ingenlath said the company will use nearly $850 million raised from the deal to fund its three-year plan to build new cars and eventually become profitable.
But Ingenlath said Polestar, which started as a joint venture between Sweden’s Volvo Cars and Chinese car giant Geely in 2017, has Advance beyond startup state.
“We advertise our business as a working, successful company — not to raise capital to build a company,” Enginlat told CNBC in a recent interview. “That’s because the next three years are going to be very rapid growth, and the company is ready for that with the product range.”
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 initial public offering, companies participating in a SPAC merger are allowed to present forward-looking projections to investors, which can help justify a large valuation. But there is no guarantee that those expectations will come true.
So far, most of SPAC’s merger with electric car companies has not yielded good results for investors. Even the relatively more successful cases Lucid GroupAnd the Fisker And the Nicola They are currently trading at 67%, 69% and 92% below their post-merger highs, respectively. EV truck maker RivianWhich went public through a traditional IPO, also suffered. Its shares are down 84% from their post-IPO high.
But Polestar can have many 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 United States. It has a working plant in China and an assembly line due to start production later this year at a South Carolina joint plant with Volvo.
Over the next three years, the company plans to add three cars to its current model, the Polestar 2 compact crossover in China. Extras are a large SUV, the Polestar 3; mid-size crossover, Polestar 4; The Polestar 5 large sedan aims to be the brand’s flagship vehicle.
They will all be fully electric and will all be shown in the United States, 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 take the company into annual sales of about 290,000 vehicles.
Enginlat said Polestar may need to raise more cash before it becomes profitable — a milestone he expects to reach before 2025. If so, he said, the company will likely issue bonds rather than sell more shares.
So far, Enginlat said the company’s plan is on the right track. It has received more than 32,000 orders for the Polestar 2 since the beginning of the year, with these orders arriving from 25 different countries. Polestar has also secured an order from car rental giant Hertz 65,000 cars over the next five yearsa deal Ingenlath said is primarily aimed at giving consumers a chance to try out the company’s electric vehicles.
Polestar’s plan is to have sales and service networks in 30 countries by the end of next year, but Ingenlath said the company is likely to reach that milestone sooner.
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