VOLVO

How the brand intends to penetrate Chinese electric vehicles in Europe and the United States

Polestar CEO Thomas Ingenlath said he was surprised by the increase to 100% in taxes on electric vehicles manufactured in China, announced by the Biden administration. According to the manager of this manufacturer, which until the beginning of the year was controlled by Volvo and the Chinese Geely — with Volvo wholly belonging to this Chinese group led by Li Shufu —, but which is now 100% owned by Geely, “if everything indicates that free automobile trade between China and the North American market is not possible, at least that fair trade may be possible.”

But the obstacles for Chinese builders to enter Western markets with greater purchasing power, such as Europe and the USA, promise to soon become even more complicated. This is because Europeans are expected to join North Americans in increasing taxes on imports of battery-powered models (and not only) from China.

It is curious that Chinese manufacturers complain about the level of demands they will have to face to sell freely in the USA, when for years they forced North American brands, which wanted to sell in China, to build factories in the country, and then “offer” 50% to a local manufacturer, owned by the State, who is responsible for copying all of its technology. Given all this, the rules that the Biden Government proposes to adopt seem much less demanding.

In Europe, the Chinese face another type of problem. To begin with, the European Union suspects that the State illegally finances local manufacturers, very generously subsidizing the sale of vehicles. And this is a pressing need for the Chinese economy, which has already experienced better times, since the installed local production capacity is 44 million vehicles and Chinese consumers are only buying around 24 million, so there are 20 million of Chinese cars that have to find customers in export markets.

To survive the “trambles” that await Chinese cars bound for both sides of the Atlantic, Polestar has a strategy. To get around the limitations imposed by the Americans, Thomas Ingenlath intends to manufacture the next Polestar 3 (the top-of-the-range electric SUV) at the Volvo factory on the outskirts of Charleston, South Carolina, with the Polestar 4 to be produced in South Korea. South, by Renault, thus avoiding taxes on entry from the USA.

For Europe, the solution found by Polestar's CEO is similar, but with some delay. The explanation has to be found in the fact that Ingenlath does not plan to manufacture in Europe, at Volvo facilities, before 2027, the year in which the Polestar 7 should hit the market. Until then, the brand has to find a way to sell the cars that it produces, since despite the Polestar 2 being a competitive tram, the global sales volume of this model is alarmingly low. To the point where Blomberg feared for the future of this Geely brand and Volvo had to get rid of its Polestar shares, just because they were hurting its share price.

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