Volvo Cars subsidiary Polestar has agreed to go public through a merger with blank-check firm Gores Guggenheim at a valuation of $20 billion, the company said Monday.
Once the deal is closed, the new public company will be named Polestar Automotive Holding UK Limited, which is expected to be listed on Nasdaq under the ticker symbol PSNY.
The new company’s enterprise value represents approximately three times its estimated 2023 revenue and 1.5 times its 2024 estimated revenue, according to the release.
Current Polestar equity holders will retain approximately 94 percent ownership in Polestar and roll 100 percent of their equity interests into the pro forma company.
The $20 billion figure matches the reported valuation of Volvo, which plans to list on the Stockholm stock exchange this year. It is also double the value of Renault Group.
Other electric vehicle startups that that are already on the market include U.S.-based Lucid Motors, which is also positioning itself as a premium EV maker, had a market capitalization of $40.7 billion as of Friday. Among recent Chinese market entrants, Nio has a valuation of $58 billion, XPeng is valued at $30.2 billion and Li Auto at $27.4 billion.
Polestar raised $550 million in external funding in April and announced plans in June to build the Polestar 3 electric SUV at Volvo’s U.S. plant in South Carolina starting in the second half of 2022.
Polestar delivered about 10,000 vehicles in 2020 and expects to sell approximately 290,000 vehicles a year by 2025, according to the release.
Polestar says it’s on track to double its global retail locations to 100 this year and the believes having 200 locations in 2022 is within reach.
“It’s highly possible with the market expansion we are looking at,” Polestar global sales boss Mike Whittington told Automotive News Europe in July.
The Tesla challenger has positioned the Polestar 2 as a direct rival to the Model 3.
Gores Guggenheim, led by Chairman Alec Gores and CEO Mark Stone, is sponsored by affiliates of Gores Group and Guggenheim Capital. It raised $800 million in a March initial public offering.
Reuters and Bloomberg contributed to this report