The Next Tesla Or Lucid Motors? The Polestar SPAC Merger Could Put The EV Maker In the Lead

The Next Tesla Or Lucid Motors? The Polestar SPAC Merger Could Put The EV Maker In the Lead


A leading electric vehicle company announced a long-awaited SPAC merger Monday morning and is setting itself up to be the next leader in the market.

The SPAC Deal: Polestar announced a SPAC merger with Gores Guggenheim (NASDAQ:GGPI) valuing the company at $20 billion. The valuation is a decline from the originally reported $25 billion when rumors between the two companies were reported. 

Investors in Polestar include Volvo ADR (OTC:VLVLY), Geely Automotive Holding ADR (OTC:GELYY) Chairman Eric Li and Leonardo DiCaprio.

Current GGPI shareholders will own 3.8% of the new company.

The company will trade as Polestar Automotive Holding with the ticker PSNY on the Nasdaq.

About Polestar: Since releasing the Polestar 1 in 2019, Polestar has been an established company in the electric vehicle market. The company was founded in 2017 by Volvo Cars and Geely Holding.

The company is targeting the premium and luxury markets for vehicles and said they cover 80% of this target market in their presentation.

Polestar has two cars currently in production and operates in 14 countries. The Polestar 1 and Polestar 2 are award-winning electric vehicles and are well-known in many countries.

The Polestar 1 has a range of 120km and a price point of $155,000. The Polestar 2 has a price point of $50,000 to $60,000 and a range of 540km.

Growth Ahead: Polestar delivered around 10,000 vehicles in 2020 and expects to sell 29,000 in 2021.

“With two award-winning cards on the road today in 14 active markets across three continents, we seek to expand to 30 markets by 2023,” Polestar CEO Thomas Ingenlath said. “We are thrilled about the targeted addition of three new premium electric cars to our line-up by 2024, starting with our first SUV expected in 2022,”

The Polestar 3 is expected to be released in 2022 with a range of 600km. The Polestar 4 is expected to be released in 2023 followed by the Polestar 5 in 2024.

Additional factories will help the company scale with new models and increased production.

Current markets include the U.S., China and parts of Europe. According to the investor presentation, expansion plans are targeting other parts of Europe, the Asia Pacific and the Middle East as future growth opportunities.

The company lists itself as the only global electric vehicle pure-play alongside Tesla Inc (NASDAQ:TSLA).

Related Link: Is The Polestar 2 EV Really Better Than Tesla’s Model 3? Here’s Our Video Review 

Financials: Polestar is expected to post revenue of $1.6 billion in fiscal 2021. The company sees revenue growing at a compounded annual growth rate of 83% to $17.8 billion in fiscal 2025.

Polestar lists a target of 290,000 deliveries for the year 2025.

The SPAC merger values Polestar at a 3x multiple to fiscal 2023 estimated revenue and a 1.5x multiple to fiscal 2024 estimated revenue.

Rivals Tesla, Lucid Group Inc (NASDAQ:LCID), Nio Inc – ADR (NYSE:NIO) and Xpeng Inc – ADR (NYSE:XPEV) have multiples of 10.8x, 6.5x, 4.0x and 3.5x for fiscal 2023 revenue, respectively.

The 2024 multiples are 9.3x for Tesla, 3.6x for Lucid, 3.2x for Nio and 2.1x for Xpeng.

From 2022 through 2025, Polestar expects compounded annual growth of 78% compared to 18% for Tesla, 85% for Lucid, 55% for Xpeng and 35% for Nio.

Price Action: GGPI shares are up 5.01% to $10.49 on Monday at publication.

Disclosure: Author is long shares LCID.

 



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