Polestar, the premium Swedish electric car company owned by Volvo Cars Group and China’s Zhejiang Geely Holding Group Co (OTC: GELYF) said on Thursday it has raised $550 million from a group of long-term financial investors and is in talks with global investors to raise more funds.
What Happened: Polestar said it has raised funds from a range of external investors that include China’s Chongqing Chengxing Equity Investment Fund Partnership, Zibo Financial Holding, and Zibo Hightech Industrial Investment among a range of other investors.
Polestar, which was launched in 2017, has a manufacturing facility in China and launched two vehicles, the Polestar 1 and Polestar 2.
Polestar said it will use the funding to quicken its product development and technological capabilities for future cars. It said the funding comes at a time automakers around the world are ramping up electric vehicle rollout plans and rapid advancement of electric vehicle technology.
Why It Matters: The Hangzhou-based Zhejiang Geely Group reportedly plans to list Polestar via a special purpose acquisition company in a transaction that would value the business at as much as $40 billion.
The announcement comes a day after Wall Street Journal reported Polestar is wrapping up a Series A fundraising round that will value the startup at $7 billion and it’s aiming for a Series B fundraising that could boost its valuation to $20 billion by the end of June, before merging with a SPAC to go public.
Geely is playing catch-up. Rivals such as Tesla Inc (NASDAQ: TSLA), BYD Co (OTC: BYDDF), and others have established themselves, while its electric brands have sold poorly in China.
Locally, the company also faces intense competition from startups like Li Auto Inc (NASDAQ: LI), Nio Inc (NYSE: NIO), and XPeng Inc (NYSE: XPEV), which have moved faster to capitalize on the growing EV market.
Price Action: Shares of Xpeng closed 7.4% lower at $32.89 on Wednesday, Nio 3.79% lower at $37.02, and Li Auto closed 3.30% lower at $21.10.
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