Polestar to build EV in U.S. starting next year

The Volvo-affiliated electric vehicle brand Polestar will begin building vehicles in the U.S. late next year.

The Swedish company will assemble a Porsche Cayenne-sized crossover at Volvo's $1.1 billion South Carolina factory.

The production foray comes as Polestar works to establish a toehold in the U.S. auto market with the introduction of the Polestar 2 fastback, introduced late last year.

Polestar intends to be a global brand, CEO Thomas Ingenlath told Automotive News.

"So the plan has been to expand our footprint in terms of where we produce our cars," Ingenlath said. "This is the great moment where we actually prove it."

U.S. production of the Polestar 3 crossover puts the model closer to its primary market. Crossovers are the fourth-fastest-growing vehicle segment in the U.S., with market share up 3.9 percentage points in the past two years, according to the Automotive News Research & Data Center.

Ingenlath said the Polestar 3 is the "next milestone" for the company.

"It is an ambitious car and will show where we are headed with this brand," he said.

The five-seater should have a range of more than 300 miles and will offer eyes-off, hands-off autonomous driving capability once that technology is approved for use. The dual-motor midsize crossover will compete with the Jaguar I-Pace and Audi E-Tron.

Jeff Schuster, president of global forecasting at LMC Automotive, said Polestar's sourcing decision is ambitious, since EVs are not yet a proven commodity.

"The production plans are there now, but the volumes to justify them aren't," Schuster said.

EV adoption in the U.S. lingers at less than 2 percent, even as automakers plan to flood the market with more than 100 EV models over the next four years, according to Guidehouse Insights data.

But Ingenlath sees EV adoption in the U.S broadening beyond tech-friendly West Coast urban hubs.

"Slowly but strongly, the U.S. is becoming much more broad, in terms of where electrification" is taking hold, he said. "Electrification will be powerful in the next years and we want to be participating right there. The U.S, just by the pure size, we cannot ignore."

Meanwhile, Polestar also is expanding its U.S. retail footprint beyond its first handful of stores in California and New York City. By the end of 2022, Polestar expects to have 35 stores across the continental U.S. with locations in 13 states and Washington, D.C.

The Polestar 3 will be built in both the U.S. and China. Some U.S. output will be exported.

Volvo Cars will invest $118 million in the South Carolina plant to build the Polestar 3.

The U.S. production is timed with the start of production of Volvo's XC90 crossover in South Carolina. Both vehicles share the second generation of Volvo's Scalable Product Architecture, the SPA2 platform.

"We can bring Polestar 3 to Charleston because the technology will be invested in the plant," Ingenlath said.

Polestar 3 production should also help make Volvo's 2.3 million-square-foot North Charleston assembly plant more efficient.

The factory, which opened in 2018, has an annual production capacity of 150,000 vehicles. But the plant currently assembles the relatively low-volume Volvo S60 midsize sedan.

Volvo expects to build up to 30,000 S60 sedans this year, according to LMC Automotive data.