(Stockholm and Paris) Almost 10,000 cars were sold last year, and the market price is higher than that of Renault: Polestar of Sweden, which announced on Monday its future IPO for an impressive amount of 20 billion dollars, confirms the rise of electric producers , Like. champion Tesla.
Updated September 27, 2021
Polestar’s owners, Sweden’s Volvo Cars and China’s Geely, will soon introduce it to Wall Street.
This smaller European competitor to Tesla, which also counts actor Leonardo di Caprio among its shareholders, has sold just two models since its inception in 2017, and in 2020 sold just 10,000 of its luxury cars, made in China.
This huge valuation, of more than 17 billion euros, would put the brand ahead of Renault, Tata Motors or Subaru.
The stock market level of car manufacturers is dominated by Tesla, with a valuation that has exploded since 2019 to more than 767 billion dollars, ahead of Toyota and Volkswagen, still the world’s leading manufacturers in the number of cars.
About a dozen new manufacturers have gone public: Lucid Motors founded in the United States and China’s NIO or Xpeng are also at the top of the rankings, neck and neck with their ancestors Ford, Ferrari or Hyundai.
California truck manufacturer Rivian, backed by Ford and Amazon, is expected to join them soon with a large capital.
“The transition to the electric car brings great interest from the market,” emphasizes analyst Alexandre Marian, of AlixPartners. “In some cases, the very high valuations suggested that the growth path would be faster than Tesla.”
“But the risk is high. You have to admit that it is very difficult to develop as a car manufacturer. Many have broken their teeth,” emphasizes the expert.
China’s Li Auto, which raised $1.1 billion when it went public on the NASDAQ in 2020, saw its shares tumble when it went public in Hong Kong in August 2021, amid Beijing’s tightening of controls on technology.
In the US, Lordstown Motors announced in June that it was running out of money to develop its electric pickup truck on a commercial scale. Its manager later resigned, after reports emerged admitting that the company had made incorrect statements about some of the previous orders.
In the auto industry, “fixed costs are very high,” says Jessica Caldwell of Edmunds. Not only do you need a large factory, you also need to set up an entire supply chain for many car parts.
Polestar offers “the transformation of a young company” while taking advantage of “Volvo’s industrial heritage and expertise”, claimed the brand’s boss, Thomas Ingenlath, in front of investors on Monday.
“Proceeds from the suit should be used to fund meaningful investments in models and expansion of operations and markets,” Polestar said in a statement. It plans to turn a profit from 2023.
Polestar, the former sports version of Volvo models, became a brand in its own right in 2017. It aims for sales of around 290,000 cars a year in 2025 and expects to be present in 30 countries by 2023, its executives said.
To get there, Polestar plans to launch one vehicle per year: a “luxury and sporty” SUV in 2022, followed by a luxury sedan. It intends to rely on online sales and a few stores in metropolitan areas, but also on Volvo’s after-sales network.
However, the brand is not available in France, its herringbone logo is too similar to that of Citroën.
Its rating will be done through a merger in a dedicated company, Gores Guggenheim, controlled by two American investment funds. The value of $20 billion corresponds to three times the targeted sales in 2023 and 1.5 times the expected sales in 2024, notes the group.
The transaction is expected to be completed in the first half of 2022 and a listing is expected on NASDAQ.