Why Investors Should Consider Polestar Automotive Stock

There are a lot of pure-play electric (EV) stocks out there, the most obvious being Tesla Inc (NASDAQ:TSLA) and Lucid Group Inc (NASDAQ:LCID). One undervalued, overlooked EV company that's further along in its sales than many young EV companies—and whose stock has tremendous upside potential—is Polestar Automotive Holding UK PLC (NASDAQ:PSNY).

The Sweden-based EV company is a joint venture between Volvo AB (STO:VOLCAR-B, OTCMKTS:VLVOF) and its parent company Zhejiang Geely Holding Group Co., Ltd.

Polestar Automotive stock began trading on the Nasdaq on June 24. (Source: “Polestar Rings Nasdaq Bell to Celebrate Public Listing,” Polestar Automotive Holding UK PLC, June 28, 2022.)

Whereas many EV companies are trying to tempt investors by promising that their vehicles will be ready in the next year or two, Polestar Automotive Holding UK PLC already has two vehicles in production, the "Polestar 1," a hybrid sports car, and "Polestar 2," a fully electric high-volume car that has been sold in the U.S., Europe, and China since 2020.

Upcoming EV Models

Polestar Automotive Holding UK PLC plans to launch new vehicle models every year starting in 2023, when it will launch the "Polestar 3," the company’s first full-size electric SUV.

The Polestar 3, which debuted in Copenhagen on October 12, is meant to compete with the "Porsche Cayenne" in the luxury space. Polestar Automotive Holding UK PLC expects to sell 24,000 Polestar 3 units in 2023, 67,000 in 2024, and 77,000 by 2025.

The Polestar 3 is an important step toward the company's goal of selling 290,000 cars in 2025, which would be 10 times more cars than it sold in 2021.

Polestar Automotive Holding UK PLC says the "Polestar 4" will arrive in late 2023. The company expects to sell 6,000 Polestar 4 units in 2023, 43,000 in 2024, and 79,000 in 2025. With the Polestar 4, the company is targeting individual drivers and fleet operators. (Source: “Polestar 4: Model Y Challenger to Hit the Market in 2023 [Update],” TopElectricSUV, November 14, 2022.)

This past summer, Polestar Automotive inked a deal to supply Hertz Global Holdings Inc (NASDAQ:HTZ) with 65,000 EVs over the next five years. The company started delivering Polestar 2 vehicles to Hertz in June. Hertz’s fleet will also eventually include Polestar 3 and "Polestar 5" vehicles. (Source: “Polestar Begins Delivering on 65,000 Electric Vehicle Partnership With Hertz,” Polestar Automotive Holding UK PLC, June 9, 2022.)

Polestar Automotive will be launching the Polestar 5 sedan in late 2024. It expects to sell 11,000 units in 2024 and 30,000 in 2025. The Polestar 5 will likely be marketed as a niche luxury model.

In 2026, the company will launch the "Polestar 6," an electric roadster. The company is targeting an acceleration speed of zero to 100 kmh (62 mph) in 3.2 seconds and a top speed of 250 kmh (155 mph).

Polestar Automotive Holding UK PLC Sees Sales Jump & Reaffirms Guidance

Polestar Automotive delivered 21,200 EVs in the first half of 2022, more than double the 9,510 vehicles it delivered in the same period of last year. (Source: “Polestar Reports 125% Sales Increase for First Half of 2022 and Reaffirms Sales Guidance for Full Year,” Polestar Automotive Holding UK PLC, last accessed November 16, 2022.)

The company's global orders in the first half of 2022 rose to 50,000, a 350% increase from the first six months of 2021. Thanks to this robust performance, Polestar Automotive reaffirmed its full-year target of delivering 50,000 EVs.

Polestar Automotive Holding UK PLC announced that it delivered approximately 9,215 vehicles in the third quarter, bringing its total year-to-date sales to approximately 30,400 EVs, up by 100% from the same quarter last year. (Source: "Polestar Reports Results for the Nine Months Ended September 30, 2022," Polestar Automotive Holding UK PLC, November 11, 2022.)

The company ramped up its production to meet its target of delivering 50,000 vehicles following COVID-19-related disruptions in China earlier this year. It expects to deliver the remainder in the fourth quarter.

Thomas Ingenlath, Polestar Automotive Holding UK PLC's CEO, commented, "We needed to catch up on production after Covid-19 related setbacks in China and we have." (Source: "Polestar Reports Global Volumes for the Third Quarter of 2022 and Confirms Full Year Outlook," Polestar Automotive Holding UK PLC, October 8, 2022.)

He continued. "The majority of Polestar 2 cars set for delivery in Q4 are ready and making their way to our customers in 27 markets around the world, with the fourth quarter set to be our strongest on record yet.”

Polestar Automotive Holding UK PLC Gets $1.6 Billion From Major Shareholders

Polestar Automotive recently announced that it secured $1.6 billion in financing from its two main shareholders. (Source: “Polestar Obtains USD 1.6bn Financing Support From Major Shareholders,” Polestar Automotive Holding UK PLC, November 3, 2022.)

Volvo, which owns just over 48% of Polestar Automotive, said it would loan $800.0 million to the company. Polestar Automotive's other major shareholder, PSD Investment, will provide approximately the same amount of capital through "direct and indirect financial and liquidity support."

"We welcome the continued support from our major shareholders at a time when the capital markets are volatile and unpredictable," said Ingenlath. He also said Polestar Automotive has sufficient funds to see it through 2023 and is on track to reach its ambitious plans to launch three more EVs by 2026.

Despite all the great things going on at Polestar Automotive Holding UK PLC, PSNY stock continues to trade at record lows. As of this writing, it's down by 61.5% year-to-date and 57% year-over-year. Grim numbers, but Polestar Automotive stock's outlook is strong—that is, if liquidity, production, deliveries, and new vehicle models are important to a stock's value.

Analysts have provided an average 12-month share-price target for PSNY stock of $10.00, which points to potential upside of 120%.

Chart courtesy of StockCharts.com

Analyst Take

There are many wonderful things going on at Polestar Automotive Holding UK PLC. The company has been selling its first two vehicles for a few years, and it expects to launch three additional EVs by 2026.

The company delivered a high number of vehicles in the first half of 2022, and that momentum continued in the third quarter, with its year-to-date sales doubling. Polestar Automotive also recently confirmed its full-year guidance.

All this means Polestar Automotive stock could rise in value.