Volvo Cars subsidiary Polestar has agreed to go public through a merger with blank-check firm Gores Guggenheim at an enterprise value of $20 billion, the company said Monday.
Once the deal is closed, the new public company will be named Polestar Automotive Holding UK Limited, which is expected to be listed on Nasdaq under the ticker symbol PSNY.
The new company's enterprise value represents approximately three times its estimated 2023 revenue and 1.5 times its 2024 estimated revenue, according to the release.
Current Polestar equity holders will retain approximately 94 percent ownership in Polestar and roll 100 percent of their equity interests into the pro forma company.
The $20 billion figure matches the reported valuation of Volvo, which plans to list on the Stockholm stock exchange this year.
Other electric vehicle startups that that are already on the market include U.S.-based Lucid Motors, which is also positioning itself as a premium EV maker, had a market capitalization of $40.7 billion as of Friday. Among recent Chinese market entrants, Nio has a valuation of $58 billion, XPeng is valued at $30.2 billion and Li Auto at $27.4 billion.
Polestar CEO Thomas Ingenlath has watched on the sidelines as the above-mentioned companies have entered the stock market with high valuations but with limited product portfolios.
"Our company deserves trust because we have spent years establishing our credibility," Ingenlath told Automotive News Europe. "We are out there with two great cars [the Polestar 1 plug-in hybrid and full-electric Polestar 2], and we have a plan that is not a fancy dream. It is reality.
He said the next model, the Polestar 3, which will be the size of a Porsche Cayenne, is in the prototype phase and is already undergoing crash tests.
"Our Polestar 4, our second SUV, left the design studio a long time ago," Ingenlath said, adding that the coupe-styled crossover would be the size of a Porsche Macan.
The third of the three models coming by 2024 is the Polestar 5, which has been show as the Precept concept. The luxury sedan will be the size of a Porsche Panamera.
The range for all three EVs is expected to be more than 600 km (more than 370 miles).
"Those cars are our future, and that future will be amazing and really exciting," he said.
Roughly $1.05 billion of proceeds will help Polestar bring three new models to market within the next three years.
Volvo announced separately that it will invest as much as $600 million more in Polestar in connection with the Gores Guggenheim combination, giving it a close to 50 percent holding.
Polestar raised $550 million in external funding in April and announced plans in June to build the SUV at Volvo’s U.S. plant in South Carolina starting in the second half of 2022.
Polestar delivered approximately 10,000 vehicles in 2020 and is targeting 29,000 vehicle sales this year.
Polestar expected deliveries to grow to 290,000 in 2025, when it expects to make a roughly 9 percent margin on earnings before interest and taxes.
It’s operating in 14 markets now and planning to be in 30 by the end of 2023.
Ingenlath said the automaker will not need to add a car plant to meet its 2025 volume target.
"We have access to existing manufacturing footprint in the group," he said. "That is why this [expansion] possible. We can concentrate on developing these cars."
Polestar says it's on track to double its global retail locations to 100 this year and the believes having 200 locations in 2022 is within reach.
"It's highly possible with the market expansion we are looking at," Polestar global sales boss Mike Whittington told Automotive News Europe in July.
The Tesla challenger has positioned the Polestar 2 as a direct rival to the Model 3.
Gores Guggenheim, led by Chairman Alec Gores and CEO Mark Stone, is sponsored by affiliates of Gores Group and Guggenheim Capital. It raised $800 million in a March initial public offering.
Reuters and Bloomberg contributed to this report
Correction: A previous version of this story confused Renault's enterprise value and its market capitalization.
