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Polestar, the electric-car maker backed by China’s Geely, said it will seek new suppliers to get around a US government ban on Chinese software in new high tech vehicles.
The ban threatens Polestar’s future in the US, but its chief executive Michael Lohscheller said the group would continue to expand in America despite the return of Donald Trump as president, who has vowed to revoke the country’s electric vehicle “mandates”.
Last week, the US commerce department finalised rules prohibiting the use of Chinese software and hardware for electric vehicles, shutting out cars made in China from the American market.
Polestar was considering new non-Chinese suppliers for its EV software and other components Lohscheller said in an interview, adding the group had enough time to find a solution before the ban came into effect from its 2027 model year vehicles.
“We have a manufacturing facility in the US. We are creating American jobs,” Lohscheller said, referring to a Volvo plant in South Carolina that produces Polestar EVs.
“We will and have to find solutions because the US is a big growth market for us.”
Polestar was spun out of Swedish carmaker Volvo, which itself was bought by Geely in 2010, and listed in 2022.
However, Polestar’s shares on Nasdaq have since languished, losing more than 90 per cent of their value as the company burnt through cash to scale up its premium EV business.
Last week, Polestar revealed it would take two more years for its free cash flow to turn positive and lowered its market expansion plans.
Following a major offloading last year, Volvo retains an 18 per cent stake in Polestar. Geely and its owner Eric Li own a combined 63 per cent stake.
In the US, Polestar faces Trump’s executive order to end generous EV subsidies and the president’s threat of a global tariff war. This comes on top of rising competition from Chinese rivals and Tesla in other markets.
Some analysts have questioned whether Polestar can expand in the US under its current ownership structure.
Barclays analyst Dan Levy said in a note that Polestar may “either need to exit the US or be spun out into an independent company with no control from Geely nor usage of Geely technologies”.
However, Lohscheller said pulling out of the US was not an option. “I think we should hold the course” on Polestar’s electric vehicle strategy, he added. “And then we will see what customers really want.”
The former Opel chief stressed Polestar’s software-defined vehicles and other technologies will set the brand apart at a time when many other start-ups have struggled with slowing growth in sales of battery-powered cars.
He added order intake for the company’s electric vehicles was up about 37 per cent in the fourth quarter due to demand for its Polestar 3 and 4 models.
“Who else has this [strength in software-defined vehicles] in the market today? And the answer is Tesla, Rivian and the Chinese. That’s a big, big advantage,” he added.
Lohscheller cautioned against “overreacting” to Trump’s executive orders upon taking office, including one aimed at halting distribution of unspent funding from former president Joe Biden’s landmark climate legislation.
He added: “One statement on the first day doesn’t have to solve everything. If [Biden’s Inflation Reduction Act] were really stopped, let’s see because . . . there was a lot of good investment going into the US. Let’s see how that plays out.”
