Shares of Polestar went public with the code “PSNY” on Friday, becoming the latest electric vehicle maker to go public through a merger with a special purpose acquisition company, or SPAC.
Polestar shares began trading on the Nasdaq exchange the day after completing its merger with SPAC Gores Guggenheim. The EV maker’s shares ended the day at $13.00, up 15.8% from SPAC’s final closing price on Thursday.
Polestar CEO Thomas Ingenlath said the company will use $890 million in proceeds from the acquisition to fund a three-year plan to build new vehicles and eventually turn a profit.
But Ingenlath said Polestar, which started as a joint venture between Sweden’s Volvo Cars and Chinese auto giant Geely in 2017, has progress beyond the startup state.
“We went public as a running and successful business — not to raise capital to build a business,” Ingenlath told CNBC in a recent interview. “That’s because the next three years are going to be super-fast, the company is aiming for that with its product portfolio.”
SPAC transactions have become a more popular way for companies to list shares in recent years. Disclosure requirements are simpler than those in a traditional IPO. Unlike a traditional IPO, companies participating in SPAC mergers are allowed to present future projections to investors, which can help justify a high valuation. But there is no guarantee that those predictions will come true.
So far, most SPAC mergers with electric vehicle companies have not yielded good returns to investors. Even relatively more successful cases Lucid’s group, Fisker and Nikola are currently trading at 67%, 69% and 92% respectively below their post-merger highs. EV . truck manufacturer Rivian, which went public through a traditional IPO, has also struggled. Its shares are down 84% from their post-IPO high.
But Polestar may have some advantages over its competitors. Volvo Cars still owns 48% of the company, and Polestar already has more than 55,000 vehicles on the road in China, Europe and the United States. It has a factory operating in China and an assembly line that will begin production later this year. South Carolina factory shared with Volvo.
Over the next three years, the company plans to add three more vehicles to its current model, the compact Polestar 2 crossover made in China. The additions are a full-size SUV, the Polestar 3; a midsize crossover, the Polestar 4; and a full-size sedan, the Polestar 5, is intended to serve as the brand’s flagship vehicle.
All will be fully electric and all will be offered in the US, Europe and China. Polestar plans to build its vehicles in all three regions. By the end of 2025, Ingenlath expects Polestar’s three-year roadmap to bring the company to around 290,000 vehicles in annual sales.
Ingenlath said Polestar may need to raise more cash before it becomes profitable — a milestone he expects to hit before 2025. If so, he said the company is likely to issue bonds shares rather than selling more shares.
So far, the company’s plans are moving in the right direction, says Ingenlath. It has received more than 32,000 orders for Polestar 2 since the start of the year, with orders coming from 25 different countries. Polestar has also received an order from car rental giant Hertz for 65,000 cars in the next 5 yearsa deal that Ingenlath said is primarily intended to give consumers the opportunity to try out the company’s electric vehicles.
Polestar’s plan is to operate a sales and service network in 30 countries by the end of next year, but Ingenlath says the company will likely hit that milestone sooner.