Many people think that President Joe Biden’s new tariffs on Chinese electric vehicles won’t have a big effect right away. This is because most people in the U.S. don’t buy these kinds of EVs.
As Wolfe Research analysts put it in a note, China’s electric vehicles are “rightly seen as a future threat.” However, Biden’s tariffs on these vehicles and other important Chinese goods are “more protective/symbolic than currently disruptive.”
Polestar PSNY, -6.57%, a company based in Sweden, is the only one selling EVs made in China in the U.S. The company said last month that its ownership structure had changed. Now, Chinese auto giant Geely owns 24% of the company, and Volvo Cars VOLCAR.B, -4.81%, which is mostly owned by Geely, owns 18%.
Citi analysts said they talked to Polestar about the higher U.S. tariffs and were told that the EV maker is still thinking about what the Biden administration said. Analysts also said that Polestar had been moving away from having its EVs made in China before the news about U.S. tariffs came out this month.
Analysts had predicted that the U.S. would raise tariffs on Chinese cars. In early April, a Raymond James team saw “strong signals that elevated tariffs on Chinese cars are highly likely.”
The Citi analysts wrote in a note on Wednesday, “As a reminder, production of the Polestar 3 is expected to begin in South Carolina this summer. Production of the Polestar 4 will take place in South Korea.” “Polestar is also thinking about making more cars in Europe in the future.”
Both the Polestar 3 and the Polestar 4 are SUVs. The Polestar 4 was first shown to the public in the United States in March at an auto show in New York City.
In a news release last month, Polestar made the same point as Citi’s team.
As a way to make its key markets, like the U.S., more profitable, Polestar is making big steps toward expanding its manufacturing footprint, the company said. It said that South Korea would start making Polestar 4s in the second half of 2025.
Polestar didn’t answer MarketWatch’s request for comment right away on Thursday. The company told Business Insider on Wednesday the same thing it told Citi’s analysts: it was looking into the Biden administration’s announcement.
In their note, Citi’s analysts also said that Polestar’s American business has been small. They said that only 7,500 Polestar 2 sedans were sold last year, which is only 14% of the company’s global volume.
Citi analysts currently rate Polestar’s stock as “Neutral/High Risk” and set a $1.70 price target for it. Polestar stock ended the day at $1.28 on Thursday, down 43% for the year.
