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Polestar, a Swedish premium pure electric vehicle (EV) company, said on August 14 that it has started production of SUVs in the U.S. Polestar is a brand jointly launched by Chinese private automaker Zhejiang Geely Holding Group and its Swedish subsidiary Volvo Cars. The purpose of starting production in the U.S. for the first time is to circumvent heavy tariffs on Chinese products.
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| The US factory that has started production of Polestar (South Carolina in the eastern United States) |
The Polestar 3 SUV is produced at Volvo’s assembly plant in South Carolina, eastern U.S. It will be supplied to the U.S. from September and will also be exported to Europe.
Polestar previously manufactured the vehicles in factories in Chengdu, Sichuan Province and other places in China and exported them to various countries. It is expected that the main factory for Polestar 3 will be changed to the United States.
In addition, Geely has proposed a plan to start production of the new SUV coupe “Polestar 4” in South Korea in mid-2025, which will be sold in Europe from April. It is also discussing the construction of a factory in Europe in the future and plans to consult with Volvo and its partner Renault of France.
The reason why Polestar is eager to move its production outside of China is that Europe and the United States have imposed high tariffs on Chinese products. As a punitive tariff on Chinese products based on Section 301 of the US Trade Act, the United States will increase the tax rate on pure electric vehicles and vehicle batteries from August to September. In particular, the tariff on pure electric vehicles will increase significantly from 25% to 100%.
In July, the European Union (EU) also launched temporary measures to increase tariffs on Chinese-made pure electric vehicles by 17.4% to 37.6% on the previous 10%.
Polestar CEO Thomas Ingenlath commented on the start of US production: “This is an important step. (Exports to Europe) will enable us to strengthen our business more broadly.”
There are also concerns. Former Republican President Trump once hinted that if he is re-elected as president in the general election, he will further increase tariffs on Chinese products.
Among the punitive tariffs imposed by the United States, the tax rate on Chinese-made automotive batteries will also be increased from 7.5% to 25%. Polestar purchases batteries from China’s Contemporary Amperex Technology Co., Ltd. (CATL), the world’s largest automotive battery company, so it is expected that cost increases will be difficult to avoid.
Nihon Keizai Shimbun (Chinese version: Nikkei Chinese website) Lin Yingshu Frankfurt
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