You predict a 9 percent EBIT margin on earnings of $1.6 billion by 2025. That is a BMW-level EBIT margin, which is something Volvo has struggled to achieve. Why do you think Polestar can reach that in just eight years after becoming a stand-alone brand and five years after debuting its first volume model?
With our contract manufacturing and the very efficient way that we are going to market, we have created a modern, premium luxury brand with a cost structure that has been optimized to generate profit in the future.
How do you address the risks created by Polestar's heavy reliance on production in China, which has tense trade relations with the U.S.?
The picture that you draw is of today. In the future, we will have U.S. production in South Carolina, starting with the Polestar 3. As our lineup grows, we will go to Europe, because we want to have production in all three major regions. Therefore, we will not end up being China-dependent with our production. We will have a healthy mix that will give us the leverage needed to avoid being overly dependent on local legislation.
Your midterm plan mentions the possibility of adding production at Volvo's factory in Ghent, Belgium. How much more can you say about that?
Let's face it, Polestar will not build its own production facility in Europe. We will always do things in conjunction with Volvo. Time will tell which location and which model we will build [Volvo also has a plant in Torslanda, Sweden]. But today even I could not name the exact location. We will see in a couple of years.
Volvo builds the Polestar 1 at a factory in Chengdu, China, and the Polestar 2 in Luqiao. Would you consider assembling the two models at the same plant to maximize efficiencies?
We do not put all our cars into one factory because with our business model we go where that architecture is already in production. Therefore, we naturally ended up with the Polestar 2 in the same factory where an electric CMA-based model, the Volvo XC40, is produced [in Luqiao]. We see this as beneficial because it does not matter that the Polestar 3 is in another factory because this is not an additional investment for us. If it goes together with Volvo's future electric flagship SUV in Charleston, that is fine. We simply follow where the car’s architecture is being produced. That is why we have a wide array of sites where our cars are contract manufactured. This allows us to go into different regions because these factories already exist. We just have to make sure that the technology we need is implemented in that factory and that it's possible to fit our car in there. That is why our efficiency and our investment story does not depend on one platform and everything being made in one factory. We use the depth in the group and match the specific car to the right technology. That way when it comes to size, when it comes to proportion and sportiness and positioning, we can very pick the right components. You know, I worked for a long time in the Volkswagen Group, where I saw how multi-brand technology sharing helped them successfully build up brands. Obviously, that has left a mark on me as well.
How much of an impact has the chip crisis had on Polestar? Has your brand been given priority in the Geely Group, which includes Volvo, Lynk & CO and Lotus?
We have some leverage because of the size of our company. Everybody understands that we are in an important growing phase and that we are very much dependent now on one product [the Polestar 2]. That means we do not have the opportunity to maneuver around between different products and plants. So, yes, we get a bit of support in that respect. Having said that, this crisis is a real threat to all car companies. We have all experienced the uncertain planning horizon that has become part our day-to-day business. We are all in this together, therefore, we have to share as much of the pain as the other brands in the group.
How long will this problem last?
Based on what we saw in the autumn and winter of 2021, we know the chip shortage will continue to be an issue in 2022. We are as prepared as we can be, and we are definitely looking forward to the day when this problem disappears.
Polestar aims to sell 65,000 cars this year, up from 29,000 in 2021. Has the chip crisis already forced you to consider adjusting your goal?
When we set the target for 2022, we did so with the chip shortage in mind. So far, we have had no reason to adjust our outlook downward, but who knows how bad things will be. We will have to wait and see how 2022 develops.
BMW recently signed a deal to secure its chip supply, would Polestar be in a position to do this or would this more likely be something done by the Geely Group as a whole?
Yes, securing a direct supply of chips is something every automaker is likely to consider, and there might be thoughts in that direction by the Geely Group. But one thing is clear, a move like this will not prevent you from having problems in 2022.
Have you been surprised by the rapid uptake of EVs in Europe?
No, I am not surprised. I actually expected that to happen a bit earlier. Now, finally, we have seen a really nice pick up in Europe. And, we are seeing sometime similar in the U.S., which is completely different from our expectation two years ago. This is really good news.
What has changed?
Customers who have had the chance to try EVs are finding out how great they are to drive. Yes, we can't ignore that there is still an issue with the charging infrastructure not being built out enough, but it has improved. In addition, we are seeing that charging is not an overwhelming issue for EV owners. Another factor driving this is the topic of climate change. This will only become a more pressing matter in the minds of consumers and politicians, who will push for there to be more opportunities for CO2-free mobility. This trend has gained a lot of momentum. We only expect it to accelerate.