By Gary S. Vasilash

Polestar is an electric vehicle company that, in effect, spun out of Volvo, but Volvo is owned by Geely, but is traded on NASDAQ (as PSNY), so let’s not even try to sort out where the Gothenburg, Sweden-headquartered company exists. (It has announced it will build the forthcoming Polestar 3 in a plant in South Carolina next year. . .the Volvo plant in South Carolina.)

Anyway, yesterday as part of its Q3 earnings presentation it announced a “strengthened business plan.”

Which is notable because the company has stated it is going to put margins ahead of volume.

Thomas Ingenlath, Polestar CEO, stated, “Margin over volume is our way forward, supported by a gorgeous line-up of four exclusive performance cars.”

Meaning that Polestar is going to focus on the premium end of the EV market.

It figures that as of 2025, when it has four models in production, it will have an annual volume of 155,000 to 165,000 cars, which in and of itself is a rather small number and is smaller when you take into account it is selling globally.

Consider This

According to Kelley Blue Book, in September the average transaction price of a luxury vehicle in the U.S. was $62,342, down 6.2% from September 2022.

Here’s the key to that: “Luxury price declines in 2023 are primarily driven by aggressive price cuts at Tesla, the luxury market leader.” The Model 3 price was down 26% compared to the previous year.

And in the EV space, the average transaction price in September was $50,683, or down about 22% from the previous year “led again by market leader Tesla.”

(Tesla, because of its margins, is really the only OEM that can build mass volumes of EVs and afford to cut its prices.)

The point is, the EV market in the U.S. is pretty much a premium market.

And in the U.S., EVs are pretty much a premium proposition.

When Chevy announced the Equinox EV it made much of the fact that it was going to be a $30,000 vehicle, but it covered itself with “about” and announced a starting price of $34,995. While that is below the average price of an EV, what are the odds there will be many $35,000 Equinox EVs available?

When Chevy announced the Silverado EV work truck earlier this year, pricing was to be just below $40,000, but as reality set in, the price is now above $70,000.

EVs are an expensive proposition.

Let’s face it: until there is some massive change in battery technology (batteries are where most of the cost of an EV is found), the EV market is going to be characterized by prices higher than the ICE market—KBB found that the average transaction price for compact cars in September was below $30,000.

Credit to Polestar for saying it is going to put its profit ahead of volume, something other OEM execs don’t seem to want to say out loud.