Posted inAnalysis

Polestar and Ford rev up big electric vehicle plans

The tens of thousands of people queuing at petrol stations across the UK are all probably kicking themselves for not going electric.

And if it wasn’t bad enough having to wait in line for hours only for the fuel to have run out, the skyrocketing price of petrol is adding salt to an already sore wound.  

The blame game has already begun, with some pointing the finger at Brexit while others say it is a self-made crisis driven by unnecessary panic.

Either way, petrol prices have been chauffeured to an eight-year high.

Whatever the reason, drivers of electric and hybrid cars – inconvenienced only by increased traffic around petrol forecourts – are sailing by without a care in the world.

Work in progress

COP26 is on the horizon and talk has been plentiful around CO2 emissions, reduction strategies and clean air targets.

Increasing the number of electric and hybrid vehicles is an obvious answer. But supply/demand and cost constraints have meant that weaning the public and industry off the heroin that is fossil fuels has been challenging.

But it has also been a question of infrastructure and how difficult/expensive it is to own an EV.

I am rewatching the 2020 Ewan McGregor and Charley Boorman series ‘Long Way Up’, which sees our intrepid adventurers travel the length of South America, from Tiera del Fuego to Los Angeles, on electric motorbikes.

It follows the original series ‘Long Way Round’ and the sequel ‘Long Way Down’.

Switching from petrol to electric bikes seems very much of the environmental Zeitgeist but, as the early episodes prove, it’s not always that easy.

There is constant worry about not making it to the next town to plug in the prototype bikes that were made specially for the programme by Harley Davidson.

Energy provider Enel X installed charging stations all along the route, evidencing that the infrastructure wasn’t ready for so ambitious a journey, but often our protagonists are left knocking on doors asking residents to borrow their domestic supply – which isn’t always powerful enough.

Setting off in the South American winter also takes its tool. The cold weather saps the batteries, leaving the dynamic duo at one point relying on a diesel generator driven to their location on the back of a petrol-powered van…

Oh the irony.

Sea change

Perception has been one of the biggest hurdles for electric cars. Yes, the majority of people like to take care of the planet. Up until the point it becomes personally inconvenient. As soon as something because challenging or difficult, most people give up. It’s human nature.

Can I drive from Brighton to Manchester in a single charge without having to wait for hours at a service station to recharge the battery? If the answer isn’t ‘definitely yes’, then people are going to pick the petrol/diesel car.

Or at least that was the case before electric cars became fashionable.

Say what you want about Elon Musk, and much could be said, but he has helped make electric cars cool. While there were other car manufacturers in the market long before Tesla arrived, there was certainly a shift in perception about how practical and trendy owning a battery-powered car could be.

Whether driven by environmental reasons, government mandates, cost, self-image or any other host of reasons – demand for electric cars in on the rise. And one of the biggest car manufacturers in the world is answering the call, with a Tesla rival also putting down an ambitious marker of its own.

Ford

On 27 September, Ford Motor Company announced it is building two “massive, environmentally and technologically advanced campuses in Tennessee and Kentucky that will produce the next generation of electric F-Series trucks and the batteries to power future electric Ford and Lincoln vehicles”.

It described the move as the “largest ever US investments in electric vehicles at one time by any automotive manufacturer”.

With its partner, SK Innovation, $11.4bn will be invested at the two sites, creating nearly 11,000 jobs.

Headquartered in Seoul; SK Innovations develops and produces petroleum products and provides cell, module, pack and battery management systems.

Ford’s executive chair said: “This is a transformative moment where Ford will lead America’s transition to electric vehicles and usher in a new era of clean, carbon-neutral manufacturing.”

Bill Ford continued: “With this investment and a spirit of innovation, we can achieve goals once thought mutually exclusive – protect the planet, build great electric vehicles Americans will love and contribute to our nation’s prosperity.”

Polestar

The news from Ford came the same day that Sweden’s Polestar announced plans to list on the Nasdaq.

Polestar Performance and its affiliates have entered into a definitive business combination agreement with Gores Guggenheim, a spac formed by affiliates of US investment firms The Gores Group and Guggenheim Capital.

It would give the listed entity, known as Polestar Automotive Holding UK Limited, a value of roughly $20bn.

The company was founded by Volvo and Geely four years ago. Current equity holders will retain approximately 94% in the company.

Polestar chief executive Thomas Ingenlath said the company is currently active in 14 markets, which it hopes to expand to 30 by 2023.

“The proposed business combination and listing position Polestar as a financially strong, future proof, global electric car company. It will enable us to accelerate our growth, strategy and most importantly, our mission towards sustainable mobility.”   

Not all rosy

But every industry has its winners and its losers. And while the EV sector is still in its relative infancy, one of the casualties could be Evergrande New Energy Vehicle Group.

Having set out its ambition to rival Tesla and become the world’s biggest electric vehicle manufacturer by 2023, the precarious financial situation its parent company finds itself in means those goals will have to be put on ice. Perhaps permanently.

In a stock exchange announcement on 26 September, Evergrande Auto (as the business is also known) confirmed that “after due and careful consideration” it has terminated its planned listing.

The issuance on the Science and Technology Innovation Board of the Shanghai Stock Exchange was uneveiled in September 2020, so will mark a humbling climb down from a company that put Elon Musk in its sights.

The potential demise of Evergrande’s electric car unit will do little to dent or damage demand for EVs. With a powerhouse like Ford and a trend-setter like Polestar nailing their ESG credentials to the mast, the industry is only going to go in one direction.

And that isn’t reverse.

Kirsten Hastings

Kirsten is international editor of Expert Investor and International Adviser. She joined Last Word Media in October 2015. Kirsten has a Masters in Financial Journalism from the...

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