Early Polestar stores face a wait for volume model

Polestar's U.S. dealers expected the Swedish electric vehicle maker's first crossover model to arrive in their hip, urban stores early next year. But now they find they will be without the high-volume Polestar 3 for the better part of a year.

U.S. deliveries of the midsize crossover will begin in the fourth quarter of 2023, several months later than some retailers had anticipated.

That could prove problematic for the young brand as it claws its way into the competitive U.S. auto market.

Polestar, which sells a sedan model, delivered an estimated 6,400 units of the Polestar 2 in the first nine months of 2022, according to Automotive News Research & Data Center.

"It's disappointing not to have your franchise car," Mathew Haiken, CEO of Polestar Short Hills in New Jersey, told Automotive News. "We hoped to go from a startup to an established competitive franchise next year with a volume SUV."

The U.S. is expected to be the largest single market for the Polestar 3, with North America accounting for about 30 percent of global sales.

The crossover will "significantly boost throughput for our retailers." the brand's U.S. CEO Gregor Hembrough told Automotive News before the model's global reveal earlier this month. "This is our most critical product launch yet."

One Polestar retailer said he had banked on having the crossover to sell early next year to fund his expansion plans. The delay "throws our business planning out the window," he said, requesting not to be identified.

"We relied on information that this car would be released early next year and that our volume would be significantly up, which would justify the rent expense involved in opening stores," the dealer said. "We're carrying a massive investment — if we have to carry it another year, that's not very helpful financially."

The Polestar 3 shares a platform with affiliate Volvo Cars' next-generation EX90 full-size crossover. Software issues related to the platform are said to have complicated the development of both models, a source told Automotive News.

The vehicle will begin production at Volvo's assembly plant in Chengdu, China, midway through next year, but then launch at Volvo's Ridgeville, S.C., factory a year later.

Polestar is betting big on its midsized crossover.

According to a previous Polestar investor presentation, the automaker expects to sell 24,000 crossovers globally next year, increasing to 67,000 in 2024 and 77,000 in 2025.

Hembrough said he expects to hit his numbers.

"We have an order bank already building on the vehicle, albeit just two weeks into the launch of the car," the executive told Automotive News this week. "Based on the production deliveries in the forecast, I'll have cars in time to meet my target for 2023."

Haiken said early interest in the crossover has been strong, noting his store had received about 100 hand raisers before the product reveal. His suburban New York City store took 20 deposits on the roughly $85,000 crossover in the first week of reservations.

The Polestar 3 represents volume, profit and consumer awareness, Haiken said. "It's what the masses want," he said. "It's an SUV."

Hembrough declined to disclose reservation numbers so far, but said it's "right on our target of where we want to be."

At the launch event, attended by more than 900 dealers, investors and media, Polestar CEO Thomas Ingenlath described the Porsche Cayenne-sized crossover as the "anchor" that represents the "core of our brand."

Polestar 3 "defines the very center, the heart of Polestar in terms of size, luxury, ambition and design," Ingenlath said.

U.S. boss Hembrough said the new crossover's extended launch time line fits Polestar's retail model, which delivers customer-ordered vehicles rather than wholesaling to dealers and having them find buyers.

"This is our time to build interest in the vehicle and build the deposits," Hembrough said. "As the cars come off the boat, [dealers] have an opportunity to turn around and deliver to customers."

Polestar's focus in the next 12 months is on stocking the order bank. The brand will launch a digital media campaign in early spring focused on product design, performance, safety and sustainability.

"We've already generated some rich stories that we tell the customers about the core reasons to engage with the product, but also to buy the product," Hembrough said.

A multicity product roadshow will follow to get customers into the crossovers

"This is getting people out of their houses, off the couches and into the product," Hembrough said. "And that's where we'll start to see the big engagement come."

Polestar is at an "inflection point" in America, said Adam Simms, CEO of Price Simms Family Dealerships of Napa, Calif.

"It's starting to become the buzz at the cocktail party," said Simms, who operates two Polestar stores in the Bay Area. "Dealers have ample growth opportunity with the current product."

Nicholas Long, dealer principal at Polestar Princeton in New Jersey, said robust demand for the Polestar 2 sedan should keep his store humming next year.

"I definitely would be excited to show the Polestar brand in a new SUV," Long said, "but I think the anticipation will be worth the wait.

"There's plenty of buyers out there, to be honest."