Polestar Expands Production to Europe with New Collaboration with Volvo

On July 3, Polestar announced its plan to diversify its production base by extending its contract manufacturing operations to Europe. The company has signed a memorandum of understanding with Volvo Cars to produce the Polestar 7 at Volvo's factory in Kosice, Slovakia, preparing for the launch of this premium compact SUV in 2028. This move aims to shift more production away from China and reduce exposure to high tariffs in Europe and the U.S. The Polestar 7 will be developed based on Polestar's recently announced strategy, leveraging the platform architecture from Zhejiang Geely Holding Group. It will utilize Volvo's technological foundation, benefit from component sharing within Geely, and incorporate next-generation battery integration technology with higher density and performance, along with a new generation of independently developed electric motors. CEO Michael Lohscheller stated, 'Collaborating with Volvo Cars to jointly develop and produce the Polestar 7 in Europe is a unique opportunity to solidify our position in the local European market. Our strategy of using Geely's architecture as the foundation for our future product lineup allows us to acquire cutting-edge technology at optimal costs. With its distinctive design and sporty driving characteristics, the Polestar 7 will set a new benchmark in the premium compact SUV segment.' Håkan Samuelsson, President and CEO of Volvo Cars, remarked, 'Our collaboration with Polestar on the joint development and production of the Polestar 7 showcases how Volvo Cars and Polestar continue to leverage synergies to efficiently create outstanding vehicles for differentiated customer groups.' The Kosice factory broke ground in 2023 and is strategically located with excellent logistics conditions connecting to the European market and a mature supplier base. Production is expected to start in 2026, with an annual capacity of 250,000 vehicles. Notably, Polestar vehicles exported to Europe face a 28.8% tariff, while those exported to the U.S. incur over 100% tariffs. The EU imposed tariffs on Chinese electric vehicles last year, impacting Polestar more than most European car companies, as most of its vehicles are manufactured by Volvo or Geely in China. Currently, Polestar produces some Polestar 3 SUVs at Volvo's plant in South Carolina, and earlier this year, it halted new orders for the Polestar 2 from U.S. customers while it is still produced in China. Polestar will also export the Polestar 4 from its factory in South Korea, which is expected to commence production in the second half of this year.