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Polestar has started producing its flagship model 3 SUV in the United States, taking a big step to avoid significant tariffs on vehicles made in China.
The Swedish EV maker was manufacturing units in Chengdu, China, and exporting them to overseas markets.
Still, the official announcement confirms the Polestar 3 as the company’s first release to be produced on two continents.
The expected tariffs imposed by the US and Europe on Chinese imports would have had a significant impact on the balance sheet for the Volvo Cars subsidiary, with a knock-on effect on sales.
While it is unclear how the Polestar 2 will be impacted, there is evidence that plans are in place to develop the 4 in South Korea by the mid-point of 2025 to further diversify operations and avoid costly tariff penalties.
“Exporting the South Carolina-produced Polestar 3 to Europe will strengthen our business on a broader scope”, company CEO Thomas Ingenlath told Reuters. He added the option of an electric SUV built in the States for American customers is a “crucial step” for the firm.
Polestar Production Plans
Despite Volvo Cars being majority-owned by Geely, the company has been forced to react to the tariff situation, which is out of its control.
It is expected the majority of Polestar 3 units will be shipped from the South Carolina factory, serving the US and European markets. Ingenlath did not disclose the maximum capacity at the new site, but production is expected to be ramped up to total volume within two months.
With the move to the US, Polestar will be cognizant of wider trends in the EV market which have culminated in declining consumer demand. Across the sector, including that of the leading manufacturer, Tesla, the prices of EVs have fallen, and plans have been revised as budgets are squeezed.
Polestar made staff cuts earlier this year, with 15% fewer positions. It aspires to make savings on materials and its logistical operations to drive efficiency increases toward the aim of breaking even in 2025.
Last month, the company confirmed 7,200 units were delivered in Q1 2024, with cash and cash equivalent assets of $784 million up to the end of March 2024.
