Polestar (PSNY, Financials) said Thursday it will build its upcoming Polestar 7 sport utility vehicle at Volvo Cars’ new factory in Slovakia, aiming to lower its exposure to rising European and U.S. tariffs on China-made electric vehicles.
The company said it signed a memorandum of understanding with Volvo Cars, both of which are controlled by China’s Geely. Volvo’s Kosice plant is expected to begin production in 2026 and will have an annual capacity of 250,000 vehicles.
Polestar, which has yet to reach profitability, faces 28.8% tariffs on China-made EVs shipped to Europe and more than 100% on those sent to the United States. Most of its production currently takes place in China through Geely and Volvo.
The firm already assembles some Polestar 3 units in South Carolina and will export the Polestar 4 to the United States from South Korea later this year. However, it stopped accepting U.S. orders for the China-built Polestar 2 earlier in 2025.
Polestar said diversifying production to Europe reflects a broader strategy to manage geopolitical trade friction and improve cost competitiveness. Investors will be watching how these shifts affect margins and delivery timelines as the company works toward profitability.
