Polestar’s American Pivot: How Tariffs Are Reshaping Where EVs Get Built — And Who Survives

Polestar is moving all production of its flagship SUV to the United States. Not because it wants to. Because it has to.

The Swedish electric vehicle maker announced that it will consolidate global manufacturing of the Polestar 3 at Volvo’s factory in Ridgeville, South Carolina, abandoning plans to build the vehicle at a Volvo plant in Chengdu, China. The decision, driven by punishing U.S. tariffs on Chinese-made vehicles, marks one of the most dramatic production shifts in the EV industry this year — and it tells a broader story about how trade policy is redrawing the map of global auto manufacturing in real time.

The Ridgeville plant, which Volvo opened in 2018, has been operating well below capacity. It currently produces the Volvo S60 sedan, a model nearing the end of its lifecycle, and was already slated to build the Polestar 3 alongside the Volvo EX90. Adding exclusive Polestar 3 production gives the factory a reason to keep its lines running and its workers employed. For Volvo’s parent company, Geely, and for Polestar — which Geely also controls — this is as much about factory economics as it is about tariff avoidance.

“Consolidating Polestar 3 production in the U.S. is a strategic step that strengthens our operational efficiency,” Polestar CEO Michael Lohscheller said in a statement, as reported by Ars Technica. He added that the move allows the company to “better serve our customers in key markets while optimizing our industrial footprint.”

Translation: the math doesn’t work any other way.

The tariff wall facing Chinese-built vehicles entering the U.S. now stands at a staggering 100% — a rate established under the Biden administration in 2024 and maintained, even escalated in spirit, under the current trade posture. For a company like Polestar, which had been splitting Polestar 3 production between China and the U.S., shipping Chinese-built units to American buyers was simply no longer viable. Even exporting to Europe from China has become more expensive, with the European Union imposing additional duties on Chinese-manufactured EVs in late 2024.

So Ridgeville gets all the volume. And Polestar gets to keep selling in its most important markets without a crippling tariff penalty baked into every sticker price.

The Factory That Needed a Lifeline

The South Carolina plant’s story is its own kind of cautionary tale. Volvo built the facility with ambitions of making it a cornerstone of its North American strategy. But the S60, its primary product, never sold in the volumes that would justify a dedicated U.S. assembly line. Production numbers have been modest. The plant has capacity for roughly 150,000 vehicles per year, and it hasn’t come close to filling it.

The EX90, Volvo’s own electric SUV that shares a platform with the Polestar 3, was supposed to help. But the EX90’s launch was plagued by software delays — problems rooted in Volvo’s partnership with Qualcomm and its adoption of an Android Automotive-based infotainment system that proved harder to get right than expected. Those delays pushed back production timelines and left the Ridgeville plant waiting.

Now, with the Polestar 3 consolidation, the factory has a clearer path to justifying its existence. Polestar confirmed to Ars Technica that the shift applies to all global markets — not just the U.S. Every Polestar 3 sold anywhere in the world will roll off the line in South Carolina. That’s a significant commitment, and it turns what was a secondary production site into the sole source for one of Polestar’s most important models.

The Polestar 3 itself is a large, premium electric SUV competing in a segment that includes the BMW iX, the Mercedes EQS SUV, and Tesla’s Model X. It starts at around $73,400 in the U.S. and rides on the same SPA2 platform underpinning the Volvo EX90. Dual-motor all-wheel drive is standard, with a long-range variant offering an estimated 315 miles of EPA range. Performance specs are competitive: 489 horsepower in the base configuration, with a performance package pushing output to 517 hp.

But competitive specs don’t guarantee competitive sales. Polestar has struggled with brand awareness. Many consumers still don’t know what a Polestar is, or that it’s connected to Volvo. The company went public via a SPAC merger in 2022, and its stock has been battered since — trading at a fraction of its debut price. Losses have been persistent. Cash burn has been a concern.

Lohscheller, who took the CEO role in late 2024 after the departure of Thomas Ingenlath, has been tasked with turning the company toward profitability. Consolidating production is one lever. Reducing complexity in the supply chain is another. Building everything in one place, especially a place that avoids the worst tariff exposure, is the kind of unglamorous operational decision that can actually move the needle on unit economics.

The broader context here matters enormously. Polestar isn’t the only automaker rethinking where things get built. Hyundai has accelerated plans for its Georgia EV plant. Honda and LG are building a battery factory in Ohio. Even Chinese automakers like BYD have explored manufacturing in Mexico, Turkey, and Southeast Asia to circumvent trade barriers — though the U.S. market remains effectively closed to them.

And then there’s the flip side. Some automakers are pulling back from U.S. production because tariffs on imported parts — steel, aluminum, batteries, electronic components — have made domestic assembly more expensive, not less. The tariff environment is a maze of contradictions. Building a car in America doesn’t automatically make it cheap if the components crossing the border to reach the factory are themselves subject to duties.

For Polestar, the calculus appears to favor consolidation in South Carolina despite these input cost pressures. The Ridgeville plant already has established supplier relationships. Volvo has invested in localizing parts of its supply chain. And the alternative — continuing to build in China and eating a 100% tariff — is obviously worse.

There’s also a political dimension. Having a “Made in America” story doesn’t hurt when the political winds in Washington favor domestic manufacturing. Polestar can point to jobs in South Carolina. It can highlight investment in American infrastructure. Whether that translates into any policy goodwill remains to be seen, but it certainly doesn’t hurt the brand’s positioning in a market increasingly sensitive to where products come from.

Polestar has said it expects the production transition to be completed in the coming months, with Chinese output of the Polestar 3 winding down as Ridgeville ramps up. The company has not disclosed specific volume targets for the South Carolina plant, but analysts expect modest initial numbers — Polestar’s total global deliveries in 2024 were approximately 44,000 units across all models, and the Polestar 3 is just beginning its commercial rollout.

The real question is whether this move is enough. Polestar still faces a crowded market, thin margins, and the fundamental challenge of building a luxury EV brand from near-zero name recognition. Consolidating production solves one problem — tariff exposure — but it doesn’t solve the demand problem. It doesn’t solve the profitability problem. And it doesn’t solve the problem of competing against Tesla’s brand dominance and legacy automakers’ dealer networks.

What it does is buy time. And in the current EV market, where multiple startups and smaller players are fighting for survival, time is the scarcest resource of all. Fisker is gone. Lordstown is gone. Arrival is gone. The list of EV companies that didn’t make it keeps growing.

Polestar, backed by Geely’s deep pockets and Volvo’s manufacturing infrastructure, has more runway than most. But runway isn’t infinite. The move to South Carolina is a bet that operational discipline — building the right car, in the right place, at the right cost — can keep the company in the race long enough to reach scale.

It’s a pragmatic bet. Not a glamorous one. But in an industry littered with companies that prioritized vision over viability, pragmatism might be exactly what Polestar needs.