Polestar has initiated production of its Polestar 3 SUV at Volvo’s US plant in South Carolina, a strategic move to circumvent hefty tariffs imposed on Chinese-made vehicles by the US and Europe. The Swedish electric vehicle (EV) maker, majority-owned by China’s Geely, has previously manufactured its cars in China for export.

The shift to US production aligns with a broader industry trend as automakers accelerate plans to diversify manufacturing locations in response to escalating trade tensions. Polestar aims to supply both US and European markets from the South Carolina facility, with deliveries commencing next month.

The company is also expanding its global footprint with plans to produce the Polestar 4 coupe-SUV at a Renault plant in South Korea later this year. This dual approach will help mitigate tariff impacts, particularly for US-bound Polestar 4 models.

Despite these production expansions, Polestar faces challenges. The EV market is cooling due to rising interest rates and inflation, forcing price cuts and job reductions across the industry. To navigate this turbulent landscape, Polestar is prioritizing cost reduction through material sourcing, logistics optimization, and efficiency improvements. The company aims to achieve cash flow breakeven in 2025.

Longer-term, Polestar seeks a European production base to complement its US and Asian operations. The company envisions partnering with another automaker for this venture, potentially launching production within the next three to five years. The Polestar 7 is a prime candidate for European manufacturing when it debuts in 2027.