Volvo Cars subsidiary Polestar has agreed to go public through a merger with blank-check firm Gores Guggenheim at a valuation of $20 billion, the company said Monday.
Once the deal is closed, the new public company will be named Polestar Automotive Holding UK Ltd., which is expected to be listed on Nasdaq under the ticker symbol PSNY.
The new company's enterprise value represents approximately three times its estimated 2023 revenue and 1.5 times its 2024 estimated revenue, according to the release.
Current Polestar equity holders will retain approximately 94 percent ownership in Polestar and roll 100 percent of their equity interests into the pro forma company.
The $20 billion figure matches the reported valuation of Volvo, which plans to list on the Stockholm stock exchange this year. It is also double the value of Renault Group.
Other electric vehicle startups that that are already on the market include U.S.-based Lucid Motors, which is also positioning itself as a premium EV maker. It had a market capitalization of $40.7 billion as of Friday. Among recent Chinese market entrants, Nio has a valuation of $58 billion, Xpeng is valued at $30.2 billion and Li Auto at $27.4 billion.
Polestar CEO Thomas Ingenlath has watched on the sidelines as the above-mentioned companies have entered the stock market with high valuations but with limited product portfolios.
"Our company deserves trust because we have spent years establishing our credibility," Ingenlath told Automotive News Europe. "We are out there with two great cars [the Polestar 1 plug-in hybrid and full-electric Polestar 2], and we have a plan that is not a fancy dream. It is reality.
He said the next model, the Polestar 3, which will be the size of a Porsche Cayenne, is in the prototype phase and is already undergoing crash tests.
"Our Polestar 4, our second SUV, left the design studio a long time ago," Ingenlath said, adding that the coupe-styled crossover would be the size of a Porsche Macan.
The third of the three models coming by 2024 is the Polestar 5, which has been show as the Precept concept. The luxury sedan will be the size of a Porsche Panamera.
The range for all three EVs is expected to be more than 600 km (more than 370 miles).
"Those cars are our future, and that future will be amazing and really exciting," he said.
Roughly $1.05 billion of proceeds will help Polestar bring three new models to market within the next three years.
Polestar raised $550 million in external funding in April and announced plans in June to build the Polestar 3 electric SUV at Volvo’s U.S. plant in South Carolina starting in the second half of 2022.
Volvo announced separately that it will invest as much as $600 million more in Polestar in connection with the Gores Guggenheim combination, giving it a close to 50 percent holding.