Polestar Promises More Tariff-Avoiding Local Vehicle ProductionPolestar Promises More Tariff-Avoiding Local Vehicle Production

Polestar pledges to drive forward its global manufacturing strategy to localize battery-electric vehicle production with the expectations of increased tariffs in Europe and the U.S., and as a means to cut costs.

That’s the message from its CEO, Michael Lohscheller, in an early morning interview with the BBC Business TV show.

He reiterated plans to begin manufacturing of a new compact SUV, the Polestar 7, in Europe to join its production plant for the Polestar 3 SUV in South Carolina in the U.S.

When asked about the threat of increased tariffs promised by U.S. President Donald Trump before taking office, Lohscheller says: “Needless to say, the U.S. is also a very important market not only in terms of size but in terms of influence globally."

“We manufacture locally, in South Carolina, so we are creating American jobs and we are now ramping up the production of Polestar 3 and we are also increasing the number of dealers," says Lohscheller.

Unless the Trump administration changes trade rules, Polestar avoids the problems that other Chinese-owned automakers will face entering the market by virtue of being owned jointly by Geely and Volvo. Volvo is wholly owned by Geely. That is a workaround that may not stand the scrutiny of the Trump administration. However, Volvo and Polestar, which both build cars in South Carolina, an important red state for Republicans, could find itself insulated from political hostility toward China by the state's Republicans in Congress who would not want to lose the jobs in their state.

Polestar's battery packs used in vehicles sold in the U.S. are currently manufactured by CATL in China.

“Now we have to make sure we are working through those [Trump’s] technical details," says Lohscheller. "But at the end of the day, we think American consumers are very open minded for electric vehicles especially on the East and West Coasts. So, we continue to grow in the U.S., it’s a really important market for Polestar."

While admitting the prospect of tariffs being imposed with the change of administration in the U.S., he said that localized vehicle production brings with it other commercial advantages.

Lohscheller, explains: “Polestar is listed on the Nasdaq in the U.S. and we also integrate a lot of American technology in our cars, such as Google and also Nvidia chips."

“The point of manufacturing locally is really important, not only from a tariff point of view but also from an economic point of view. I think the times when you shipped cars around the world has really changed – it’s a costly exercise," says Lohscheller.

Lohscheller says manufacturing locally for different markets is good business and the company will soon announce a European manufacturing site.

At the moment in Europe, the brand is hit by a total of 29.3% tariffs on its imported cars but could still face tariffs on its battery packs which form the bulk of a BEV’s overall production costs. In the U.S., the tariff on Chinese battery run at 7.5% but some analysts suggest this could rise to 25%.