Automotive News Europe — 2024-06-01
Automotive Industry
“There is a certain erraticness that comes with going from one day to the next to 100% tariffs,” CEO Thomas Ingenlath said.
Polestar CEO Thomas Ingenlath is perplexed by the Biden administration's sharply increased tariffs on Chinese electric vehicles.
The new tariff rate on EVs made in China and shipped to the US are poised to rise this year to 102.5%, up from 27.5%. Tariffs will also increase on raw materials such as steel and aluminum from China as well as microchips.
“There is a certain erraticness that comes with going from one day to the next to 100% tariffs,” Ingenlath told Automotive News Europe.
Ingenlath conceded that production at Polestar, which is based in Sweden but controlled by China's Geely, “started with a very Chinese orientation.”
The full-electric Polestar 2 midsize sedan and Polestar 4 midsize SUV are currently built only in China.
Ingenlath said Polestar recognized its reliance on China early on, which is why it started three years ago to find ways to globalize where its models are built.
Starting this summer the Polestar 3 large SUV will be built at sister brand Volvo's US factory near Charleston, South Carolina. In mid-2025, the Polestar 4 will also be made by Renault Korea Motors in Busan, South Korea, initially for the North American market.
Ingenlath believes the more diversified production footprint will help Polestar create a natural hedge against tariffs by the US against China-made products as well as potential retaliatory tariffs by the Chinese against cars coming from the US.
Polestar also sees the production decision protecting it against the European Union's potential tariff-rate increase on China-made EVs imported into the EU.
“Free trade is not easy anymore,” Ingenlath said during the press launches for the Polestar 3 and 4 in Spain. “This is not a problem unique to Polestar or this industry. I just hope that if no rational exists for free trade we can at least have fair trade.”
He said an example of what he considers fair trade is that almost half of all the Polestar 3s that are made in the US will be exported.
“Those will be cars produced by US workers in the US,” he said. “I hope that benefit and the value creation will be recognized.”
One location where Ingenlath would like to add production is Europe, but that will take time. He said the earliest that could happen is with the arrival of the Polestar 7, which is not due until around 2027.
“You cannot from one day to the next have a production line. It takes months – if not years – of preparation,” he said.
The CEO also addressed tariff volatility Friday in a video statement posted on the Polestar website.
“Our ability to adapt and utilize our global footprint is a significant differentiator,” he said in the recording.
Deficiency notice
Ingenlath used the recording to address the actions Polestar is taking to address a deficiency notice it received from the Nasdaq stock exchange after it failed to file it first-quarter earnings and 2023 annual report on time.
The company said it needs more time to finalize its financial statements over accounting errors in 2021 and 2022.
In the video, Ingenlath said the errors “predominantly predate our Nasdaq listing [in June 2022] and are expected to have an impact of less than 5% in each respective year. Positive in one negatively and the other.”
He said Polestar is working to correct the errors and plans to publish both results reports by the end of June 2024.
“Throughout this period, we maintained open communication with our lending banks and have secured their understanding and continued support,” he added.
Since the reporting errors were made public, Polestar's stock price has dropped below a dollar, putting its automaker listing on the Nasdaq in jeopardy.