Polestar To Undergo SPAC Merger, and Compete With Tesla

Swedish electric car manufacturer, Polestar Automotive Company is set to undergo a SPAC merger and become publicly traded on the US market. The SPAC is supported by Gores Guggenheim Inc and will push the valuation of the company to about $20 billion.

This is second only to the $24 billion mergers of Lucid Group Inc (NASDAQ : LCID) with Michael Klein’s Churchill Capital IV Corp back in the first quarter of 2021. Once the acquisition is concluded, the new outfit will be held by a new outfit, Polestar Automotive Holding UK Limited. The company is expected to be listed, and begin trading on Nasdaq Exchange under the ticker symbol “PSNY.”

The announcement makes Polestar the latest EV-related brand to complete a SPAC merger. Several others, including Arrival, Bird, EVgo, Lucid Motors, Nikola, and Proterra have completed such deals in the last two years. The Polestar deal will be backed by redeemable cash of about $800 million from the billionaire investor, Gores Guggenheim. However, this amount will not be reached if the SPAC shareholders decide to go redeem their shares.

Additionally, the merger deal will be accompanied by a $250 million private investment in public equity (PIPE). This will be supplied by major institutional investors. Following the announcement of the deal, the shares of Gores Guggenheim rose by 2.70% in the Pre-Market to $10.26 each.

SPAC Merger: A Strategy to Infiltrate the US Market

Electric cars are fast becoming the solution to the sustainability challenges of a 21st-century world riddled with fuel burning and fumes release. As such, it is becoming recognized by more and more countries. Despite the prospects, the deal has attracted the scrutiny of US regulator, the Securities and Exchange Commission.

Regardless, the company has prospects. Currently, Polestar’s electric vehicles are being driven on the streets of North America, Europe, and Asia respectively. Tesla on the other hand controls the American EV market. The SPAc merger deal once completed will help Polestar compete favorably with Tesla on the market.

Already, the automaker has developed the Polestar 2 as a better alternative to Tesla. In addition, the company announced in June that lt would manufacture the Polestar 3 in the United States. Global production will begin in 2022. This is by no means a cheap affair. Hence, going public may be the only way for the Swedish outfit to get the funds to achieve its expansion into the market.

Meanwhile, CEO of Tesla, Elon Musk speaking at the Opening Ceremony of China’s World Internet Service reiterated his company’s commitment to expanding into the region. The conference held at the artificial water town of Wuzhen.