Polestar, a New EV Company, Arrives This Week. It’s Worth More Than Rivian.

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Polestar, the electric vehicle maker being spun out of

Volvo Car
,
should begin trading on Friday with a huge enterprise value.

Polestar agreed to merge with a special purpose acquisition company, or SPAC,

Gores Guggenheim

(GGPI) back in September 2021. Now the merger process is nearly wrapped up. The deadline for shareholders to vote on the merger is Thursday and, if all goes as expected, Polestar will be trading on Friday.

Investors who hold Gores will end up holding Polestar under the new stock symbol “PSNY.”

The deal values Polestar at about $21 billion based on the roughly 2.1 billion shares outstanding after the deal closes. That is about $20 billion net of the roughly $1 billion the merger will bring onto Polestar’s books.

That enterprise value is more than

Rivian

Automotive (RIVN). Rivian’s market cap is about $27 billion, but the value of the Rivian enterprise—its market cap adjusted for cash and debt—is roughly $12 billion.

The market is treating Polestar like a serious EV player. There are some good reasons for that.

For starters, the company is shipping cars. Polestar shipped about 13,600 units in the first quarter. It expects to ship 50,000 units in 2022 and 124,000 EVs in 2023. Rivian, for comparison, is expected to deliver about 25,000 vehicles in 2022 and 86,000 vehicles in 2023.

Polestar also has two manufacturing facilities in China. One is in Taizhou, Zhejiang province, and another in Chengdu, Sichuan province. The Taizhou plant was acquired by Volvo (VOLCARB.Sweden) from Geely in December 2021.

Geely-related entities own about 84% of the stock in Volvo Car. The Swedish-listed Volvo Car stock still trades separately.

Volvo Car owns about 48% of Polestar. Its stake is worth about $10 billion. Netting the Polestar value out of Volvo Car, its stock trades at roughly 8.5 times estimated 2022 earnings.

Volkswagen

(VOW3.Germany) stock, for comparison, trades for about 4.4 times estimated 2022 earnings.

Gores’ stock is at about $10 a share in late Tuesday trading. That is the same price that the merger deal was struck at. That is not bad given what’s gone on with EV valuations in recent months.

Tesla

(TSLA) stock is down about 8% since late September, over the comparable span. The

S&P 500
is down about 15% and the

Nasdaq Composite
has fallen 26%.

Polestar stock, after the merger, will be trading at about 3 times estimated 2023 sales.

That multiple is at the upper end of the range among EV start-ups worth more than $10 billion. The Polestar multiple is better than Rivian as well as

NIO

(NIO),

Li Auto

(LI) and

XPeng

(XPEV). It isn’t as high as

Lucid

(LCID).

EV leader Tesla is trading at about 6.4 times estimated 2023 sales of about $116 billion.

Write to Al Root at [email protected]