Yahoo Finance Electric car maker Polestar valued at $20bn in Spac deal
An upmarket electric car company spun off from Volvo and backed by actor Leonardo DiCaprio has been valued at $20bn (£14.6bn) as it becomes the latest challenger carmaker to go public.
Polestar, owned by Volvo’s Chinese parent Geely, will merge with Gores Guggenheim, a listed investment vehicle in a so-called Spac deal.
The deal will see Polestar raise slightly more than $1bn as it seeks to challenge the likes of Tesla in targeting the high end of the growing electric vehicle market.
Spacs, or special purpose acquisition companies, involve merging a publicly traded “blank cheque” firm with a private company, allowing it to float without a traditional public offering.
They have been popular among nascent companies seeking to raise cash but which have little in the way of existing products, revenues or profits to show investors.
Polestar, whose cars start at £39,900 in the UK, started life as a Volvo-owned racing company in the Nineties. It then manufactured cars with Volvo but was spun into an independent company under Geely ownership in 2017.
The company has said it hopes to go beyond other electric vehicle manufacturers by making all aspects of its cars’ production carbon-free by 2030.
Polestar makes its cars in China but says the upcoming Polestar 3 will be manufactured in South Carolina.
Its flagship model, the Polestar 2, which claims a battery range of 258 miles and up, is designed to compete with cars such as the Tesla Model 3.
It started selling vehicles in the UK last year but was forced to recall thousands of cars globally due to faulty inverters.
Polestar shifted about 10,000 vehicles last year and expects to sell 290,000 by 2025. The $20bn valuation represents about three times its expected revenues in 2023, it said.
The company did not say when Mr DiCaprio, a noted climate activist, had invested. Polestar raised $550m from outside investors earlier this year.
Polestar will be the latest in a line of electric vehicle Spac deals, many of which have struggled to live up to their bold promises.
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