Polestar Starts US Production to Sidestep Steep EV Tariffs

Polestar Automotive Holding UK Plc has commenced production of its Polestar 3 SUV in South Carolina to avoid tariffs imposed on electric vehicles imported from China. The vehicle, priced at $73,400, faced delays due to software issues and had previously been manufactured in Chengdu, China. This move is significant for Polestar, which has been grappling with operational challenges, financial losses, and escalating trade tensions. The company has been reducing its workforce as part of its cost-cutting measures. Polestar had intended to manufacture in the U.S. before the announcement of tariff increases in May. As part of its strategy to diversify, the company is planning to produce the Polestar 4 SUV in South Korea next year and has future production plans in Europe. Thus far, Polestar has delivered around 20,000 cars in the first half of the year and aims to expand its market presence in 2025 with plans to enter seven new markets. Both Polestar and its parent company Volvo Car are under the ownership of China's Geely. The recent tariff hikes have also led to Volvo postponing its shipments of the fully electric EX30 model from China to the U.S. Polestar is set to report its second-quarter earnings at the end of August, following a reported operating loss of $232 million for the first quarter. In the transportation sector, Polestar's pivot to domestic production amidst tariffs reflects a broader trend of companies seeking to localize supply chains and production processes in response to geopolitical pressures. This strategy not only enhances resilience against tariffs and supply chain disruptions but also caters to increasing consumer demand for locally produced goods. The effectiveness of this strategy will depend on Polestar's ability to balance manufacturing costs while maintaining quality and meeting market demand in a competitive EV landscape.