Polestar Sets Table for What It Hopes Will Be Better 2024

Although volumes haven’t hit targets, forcing the automaker to initiate staff cuts, Polestar is making moves to reverse momentum, including launching new models, adding U.S. production and continuing to upgrade its infotainment and ADAS technology in the year ahead.

David Zoia, Senior Director-Content

January 31, 2024

8 Min Read
Polestar 5 prototype.

This year is expected to mark a pivotal point for Polestar.

The battery-electric-vehicle brand, owned by China’s Geely Holdings and its Sweden-based Volvo Car operations, is set to undertake a number of initiatives in 2024 designed to better secure its market footing both in the U.S. and globally for the next several years.

It hasn’t exactly been smooth sailing for Polestar. Largely unwilling to join in a round of BEV price-cutting in 2023, Polestar has come up short of its global sales targets. Volume of 54,600 worldwide last year was up 6% on 2022 but shy of the 60,000-70,000-unit tally the brand had set it eyes on.

In the U.S., the picture was even more disappointing, where hefty import tariffs and a lack of local production capacity to offset them, left Polestar in an even tougher competitive position. Its volume of 6,736 units in 2023 marked a 25.2% decline from 2022 and paled next to the market’s overall 49.2% gain in BEV sales, according to Wards Intelligence data.

We always said we will not dump our cars in the market where competition is giving discounts of 40%,” Polestar CEO Thomas Ingenlath tells WardsAuto in an interview at this month’s CES 2024 in Las Vegas, pinning the brand’s global target miss on the hypercompetitive market that saw Tesla and others slash prices to move the metal. “We’d rather protect our (brand) position. It’s all a question about how much do you push into a market which is not receptive?”

As for the U.S. slump, he notes, “Generally the world is becoming more restrictive and being less friendly towards free trade,” pointing to the 27.5% U.S. tariff on Chinese-built cars that has put a lid on Polestar demand.

The disappointing results are forcing the automaker to scale back its operations, with Reuters reporting last week Polestar would shrink its global workforce 15%, eliminating some 450 jobs. Although the BEV producer has been willing to give up market share amid a price war, it is not as willing to sacrifice its margins.

“We definitely have to be much more cautious about hitting our (profitability) targets and we will definitely have a much stronger eye on (that) in the months and the years to come,” Ingenlath says, foreshadowing the impending layoffs. “Because that determines whether we are successful as a premium luxury brand or not.”

New Initiatives

To that end, Polestar already is moving to reverse its momentum.

Start with the all-wheel-drive $83,900 Polestar 3 that is now finally spilling out from Geely’s Hangzhou Bay, China, plant, following delays due to software issues, and reaching buyers in 27 global markets. U.S. production at Volvo’s Charleston, SC, facility is expected to begin later this quarter.

The Polestar 3’s CUV body style is being counted on to have wider appeal, particularly with U.S. buyers. It boasts up to 517 hp in Performance dress, a range up to 300 miles (483 km) and several technology advances for the Polestar brand, such as the standard highway pilot system that operates at speeds up to 93 mph (150 km/h), a camera-based driver monitoring system, radar-based occupant detection system, park-assist pilot that can guide the vehicle into a selected spot and an Acoustic Vehicle Alert system that uses external speakers to warn pedestrians of the Polestar 3’s approach or its intention to back up near them.

The Pilot system comes by way of a new, more advanced electric/electronic architecture based on a NVIDIA DRIVE software stack and processor. The NVIDIA chipset combines with a Luminar lidar and automated-driving software from Volvo’s Zenseact software arm and provides the Polestar 3 with the brand’s most advanced driver-assistance system technology to date.

“For the good and the bad, we have been waiting a long time for this car,” Ingenlath says, alluding to the software-related hiccups that have delayed the vehicle’s launch. “With the car now being put into production…it will be a very interesting shift…seeing now what all is possible.

“Polestar 3 is the first car to customers…(with) unsupervised highway piloting and really enabling the driver to hand off a responsibility to the car. That will be a big thing.”

Meanwhile, Polestar continues to enhance other features available in its cars through its Android Automotive-based infotainment system. At CES 2024, the automaker revealed two new applications: Google’s Chrome browser (rolling out now in beta form) that supersedes the less-familiar Vivaldi web browser utilized the past couple of years and a navigation feature that allows a route mapped using an Android or Apple phone to be transferred to the car automatically on entering the cabin.

Polestar was the first automaker to use Android as the operating system to drive its infotainment stack, a move that ultimately was popular with customers but not without controversy within the industry. Even now, debate continues as to how much software OEMs should develop themselves and how much they should rely on third parties such as Google.

“We were the first ones with a Google/Android-based infotainment system in a car – for good and for bad,” Ingenlath says. “For good: From Day 1 it was a super enhancement of the product for our customers. For bad: We had to fight a lot of prejudice (within the industry).

“Of course, there’s still a big difference between what software drives the car and what software drives the entertainment system,” he adds. “It’s not like the (entire) operating system of the car is Google/Android. It is Android-based, but a big chunk of it, all the safety function, is part of what the OEM – Polestar and Volvo – does to the car.”

U.S. Production Source to Counter Tariffs

Additional help toward penetrating the U.S. market will come from a shift to local production with the Polestar 3. Volvo is investing $118 million to expand its South Carolina plant to build the CUV, which shares its platform with the Volvo EX30. Production will begin this summer, Polestar says, with shipments of China-built Polestar 3s serving the U.S. market beginning the second quarter and continuing until local production ramps up. Polestar has not announced how much capacity it will have at Charleston or the volume it expects to turn out from the plant in 2024.

And finally, Polestar will be adding two other critical models: the Polestar 4, a 4-door coupe that slots in price between the Polestar 2 and 3, and the brand-defining 800-hp-plus Polestar 5 flagship 4-door model, based on the sleek Polestar Precept concept car. Both the Polestar 4 and 5 are based on Geely’s new SEA platform.

The Polestar 4 already is rolling out in global markets. Sales reached 880 units in China in Q4 2023, and the car is going on sale this week in Europe and Australia. It will arrive in the U.S. this spring from a Renault plant in Busan, South Korea, meaning it won’t face the stiff tariffs applied to China-built cars. Plans have not been released for the launch of the Polestar 5, but that model is expected sometime in 2025.

“I think the brand equity, how much of our brand really lives up to that promise of a performance premium, luxury brand will be determined by the Polestar 5,” Ingenlath says. “With the 5, (the brand) gets into that right context and the right mixture. It is a hero-halo car. It’s so exciting and fascinating. It will have a very, very strong radiation for the whole brand.

“The second that you sit behind the steering wheel, just the ergonomics of it, (suggests) this is not a mass-market product,” he adds. “This is a very dedicated sports-car architecture and just how you sit behind the wheel, standing still, you notice that. And of course, it looks incredible – avant-garde, futuristic. The car stands out in the crowd.”

BEV Backsliding of Little Concern

The recent backslide in the BEV market – from policymakers around the world hinting they may roll back emissions targets, pending internal-combustion-engine market bans and other stick-and-carrot approaches to boosting BEV sales, as well as from mainstream consumers still hesitant to abandon conventionally powered cars – isn’t changing direction for Polestar or altering Ingenlath’s enthusiasm of the future.

Globally, he says, the enormous hype around BEVs has led to outsized expectations about the market, and the recent slowdown in growth that has some competitors scaling back production and delaying new product launches isn’t all bad for a brand such as Polestar that is 100% committed to BEVs.

“It’s like anything that is hype, it will go up and down, and I don’t think we should lose sight of the fact that the electric drivetrain is just simply the more competitive, better drivetrain for a car,” he says. “I’m very convinced that this is the direction that the car industry will go. That’s why we are a pure EV brand.

“(For) some OEMs who actually still earn all their money with combustion engines and still have combustion-engine development (ongoing), I say (they) now (only) pretend to be on that electric path,” Ingenlath adds. “We don’t do (electric vehicles as part of) fashion hype. For us, this is clearly the path to the future.”

As for expanding its lineup, Polestar doesn’t intend to stop with the Polestar 5, but Ingenlath simply laughs when asked what white space in the lineup the brand is looking to fill next.

“Our focus and task is to get, now, these three cars successfully out in the market,” he says. “We took on a lot of products with the first run, and I think everybody would expect us now to concentrate on delivering.”

About the Author(s)

David Zoia

Senior Director-Content, WardsAuto

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