Growing Polestar revises retail plan for customers who 'want the car now'

SANTA FE, N.M. — Swedish electric vehicle maker Polestar planned for a radically different retail model when it entered the U.S. two years ago, relying on low-investment, small-footprint urban stores.

But now that it is reaching the market with an expanded lineup, Polestar is revising that strategy to cater to impulse buyers and get cars faster to those who order them.

The Volvo affiliate originally adopted a no-floorplan model, delivering customer-ordered vehicles to stores rather than having its franchised retailers order them and carry inventory on their lots.

That made sense for dealer profitability. But Polestar quickly realized it didn't hit the sweet spot in the U.S. market, where many buyers want to visit a dealership and drive away in a new vehicle.

Not having inventory to sell from could put dealers at a competitive disadvantage, the startup concluded.

"The inability to have a product available for immediate delivery was hampering dealers," U.S. boss Gregor Hembrough told Automotive News on the sidelines of a press event here to showcase the latest variants of the brand's Polestar 2 fastback.

"Our Space partners were very clear that they're losing opportunities by a customer having to call up a car from the port."

In response, Polestar adjusted its strategy — furnishing its retailers with five to seven cars for spot deliveries.

"It's been one of the biggest catalysts to really get consumers to start converting to the cars quicker," Hembrough said, adding that Polestar continues to carry those vehicles on its books.

Having inventory at his Polestar Space showroom available for immediate delivery has been helpful, said Nicholas Long, dealer principal at Polestar Princeton in New Jersey.

"The American customer, they want the car now," Long said. "So it is nice having the five to seven for those customers that are ready to go at that moment."

Hembrough admitted it's been a steep learning curve as Polestar establishes a foothold in the U.S.

"You've got to have this open-mindedness to listen to people and navigate the marketplace," he said.

Polestar has also struggled with getting its China-made EVs to U.S. customers in a timely fashion. That's a problem that could worsen as the automaker expands its retail network and moves deeper into the U.S. hinterland.

Polestar plans to have 35 stores in 17 states by the end of next year.

"Getting a car through the port, onto a truck and to the dealerships wasn't as quick as it was on paper," Hembrough said. "We underestimated how long it would take."

Polestar initially expected it would take about five days to get cars from port to showroom. "That's something that was palatable to most of the people," he said. "Not everybody had to drive home that afternoon with a car."

But the reality didn't match expectations. It currently takes Polestar seven to 15 days to get cars from U.S. ports to its stores, Hembrough said.

But lengthy delivery times increase the risk of customers changing their minds and sales falling through, said Adam Simms, CEO of Price Simms Auto Group, which operates two Polestar stores in the San Francisco Bay Area. "Two weeks to have a sitting duck out there that somebody else can shoot is a lot of exposure," Simms said.

Figuring out ways to shrink delivery times is a priority for Hembrough. "There's only a couple of ways to pull the lever to get a car quicker," he said.

Delivery times are likely to shrink when Polestar begins U.S. manufacturing of a key new model.

Assembly of the Polestar 3 midsize crossover will begin at Volvo's North Charleston, S.C., factory in late 2022, with U.S. deliveries to follow. The new model is aimed squarely at the U.S. market, where crossovers are the largest vehicle segment.

The Polestar 3 will debut an all-new EV platform and design language, which executives said will differentiate it from its larger cousin.

It will be a "different manifestation of product and design, away from" Volvo, Hembrough said.