Polestar's Stock Dropping Is Concerning News For Other EV Automakers
Updated on Jul 19, 2022 · 4 min read
Riding the electric vehicle industry wave is dangerous business these days. Investors and founders were full of hope and promise a year ago. The spring of 2022 saw many of those hopes dashed to the rocks.
Nearly every player in the EV game saw stocks crash in March, April, and May. The tumble made even Elon Musk sweat a little.
Things have settled a little since then, but the stock market’s lukewarm reception of Polestar at the end of June has people concerned that storm is yet to pass. Jerry, your car insurance super app, took a closer look at the story to find out more.
Polestar’s less-than-ideal starting position
When news broke in 2017 that Polestar would no longer be an all-electric arm of Volvo and instead would stand as a separate EV brand, the response among potential investors was generally positive.
It seemed like its ties to parent company Geely would give Polestar a leg up on other startups. But the company’s timing for going public almost could’nt have been worse.
After a huge influx of EV brands on the stark market in 2021, including an enormous I.P.O. for electric truck maker Rivian, investment cooled in March of the new year before crashing in May.
Polestar may have avoided the worst of the drama by holding its initial public offering off until June. But Automotive News says its stock, which jumped by only 16% on its first day and dropped 15% on its second, could be an warning sign that “the purge isn’t over.”
Why are EV stocks floundering?
With the expected transition to electric vehicles still in its early stages, it might seem confusing that stocks in the companies providing them would be struggling. But a closer look at the industry helps clear things up pretty quickly.
The pandemic created a lot of upheaval in the economy. Lockdowns and protocols did a number on the global supply chain, but they also generated a lot of financial liquidity. In 2021, a ton of those liquid assets ended up being invested in EV brands like Rivian, Canoo, and Tesla.
But as 2022 rolled in,a lot of that liquidity dried up, and the problems affecting production didn’t let up. Materials for EV batteries became harder and harder to source, especially for new companies without pre-existing suppliers. Delivery struggles hit the brakes on cash flow.
Does Polestar still have a chance?
Polestar still has a road to success. In fact, not having a breathtaking I.P.O. like Rivian might work to the brand’s advantage.
Rather than face the potential boom and bust of a rockstar start, the company has the chance to develop steady growth the old-fashioned way—by delivering quality products.
And because Polestar began under the Volvo and Geely umbrellas, it’s already been able to offer top-tier models to drivers—29,000 of which sold last year.
What does it cost to own a Polestar?
Like its stock price, the pace of Polestar’s releases have been slow and steady. Two models have been delivered—the Polestar 1 and Polestar 2—with two more on the way next year. Only the Polestar 2 was released for the 2022 model year.
Prices for the Polestar 2 start at $47,200, in similar fashion to the EVs from its sister-brand, Volvo. Car insurance for luxury EVs like this is usually higher than average, but you can save on coverage by shopping with Jerry.
A licensed broker that offers end-to-end support, the Jerry app gathers affordable quotes, helps you switch plans, and can even help you cancel your old policy. The average Jerry user saves over $800 a year on car insurance.