Tesla Rival Polestar Could Reach $21B Deal To Merge With SPAC Gores Guggenheim Today: WSJ

Electric vehicle maker Polestar could reach a deal to go public with special purpose acquisition company Gores Guggenheim Inc (NASDAQ: GGPI) on Monday, Wall Street Journal reported, citing people familiar with the matter.

What Happened: The deal is expected value the Zhejiang Geely Holding Group Co (OTC: GELYF) and Volvo Cars Group-backed Swedish company at $21 billion and could be one of the largest recent SPAC deals in the recent past.

Polestar was launched in 2017 and has a manufacturing facility in China.

Polestar, seen as Tesla Inc (NASDAQ: TSLA) rival, counts actor Leonardo DiCaprio as an investor. As per the WSJ report, existing investors will receive an additional $250 million investment as part of the deal.

Why It Matters: The latest valuation number is a significant markdown from earlier this year when the Hangzhou-based Zhejiang Geely Group reportedly planned to list Polestar for as much as $40 billion, as per a WSJ report in April.

Polestar had in October recalled all of its Polestar 2 electric vehicles — marketed as a rival to Tesla’s Model 3 — to fix a software glitch that could cause the vehicle to lose power while driving. Earlier this year, Polestar said it would assemble its third model at a Volvo plant in South Carolina. 

Geely is playing catch-up in the electric vehicle space with rivals such as Tesla, BYD Co (OTC: BYDDF) and others establishing themselves.   

The company also faces intense competition from homegrown electric vehicle startups such as Li Auto Inc (NASDAQ: LI) and Nio Inc (NYSE: NIO). 

Price Action: Geely Automobile shares closed 1.84% lower at $2.93 on Friday.

Photo: Courtesy of Polestar