Polestar's plans for U.S. keep pulsing

Auto industry bosses these days are in an unenviable position, but none more so than Gregor Hembrough.

In the maw of a global pandemic, the CEO of Polestar USA isn't just orchestrating the launch of a new vehicle in the U.S., but an entire brand.

Polestar, the Swedish electrified performance brand affiliated with Volvo Cars, is gearing up to introduce its first mass-market model here — the Polestar 2.

The market success of the electric fastback, which starts at $61,200 including shipping, is crucial for the prospects of the new brand. In addition to the Polestar 2 and Polestar 1, a limited-run, $155,000 hybrid sedan, the automaker plans a sporty crossover followed by two more models.

The odds are stacked against the electric upstart. Demand for big-ticket vehicles has evaporated as consumers hunker down for a deep and protracted recession. The National Automobile Dealers Association slashed its forecast for U.S. new-vehicle sales this year to between 13 million and 13.5 million. Its previous forecast was 16.8 million.

With the electric vehicle industry dominated by Tesla, Polestar must overcome limited name recognition and poor economic conditions to acquire any significant market share, said Sam Fiorani, vice president at AutoForecast Solutions.

"Launching a new car brand is extremely tough in good times," Fiorani said. "Doing it in the wake of the pandemic-led recession is really trying to push that boulder uphill."

Hembrough has been choreographing the launch from his home in Bergen County, N.J., where the Volvo lifer lives, breathes and sleeps cars. His personal collection includes a Jaguar E-Type, a classic Porsche 911 and a Land Rover Defender.

The past 60 days have been a whirlwind of video conference calls with headquarters in Gothenburg, Sweden, manufacturing officials in China and his U.S. team members in their homes.

"My calendar is filled with meetings from 5 o'clock in the morning to 4 o'clock in the afternoon — every single day," Hembrough told Automotive News last week by phone. "Then, from 4 until 7, it's my time to look at email and get back to people."

For Hembrough and his team of 20 in the U.S., it's a race against the clock. U.S. deliveries of the Polestar 2, in production in Luqiao, China, are expected to begin the first week of September. That target was set before the coronavirus contagion hit, but Hembrough says it's still in effect.

"It's a lot of hard work. Naturally, plans get disrupted; they get altered," he said. "At the end of this, you still have a brand to launch."

For the Polestar 2 launch, the COVID-19 crisis went from being a China-market headache to a global five-alarm fire after infections began surfacing in Europe in February. At the time, the brand's U.S. team was scouting driving routes in Europe to showcase the Precept concept electric sedan to the media there.

But as the coronavirus ravaged Italy, Swiss authorities called for the cancellation of the Geneva auto show, which meant scuttling the Precept's world debut at the show.

Once infections began showing up in California and the Northwest, conversations with headquarters in Gothenburg switched from everyday car launch routines into intense meetings about human resources, worker safety and lessons learned operating during the lockdown in China earlier.

The health crisis really hit home for the U.S. team when infections and deaths began climbing in the New York tri-state area. Polestar USA's Rockleigh, N.J., headquarters closed March 13, disrupting employee workflows. In-person meetings in conference rooms were replaced with Microsoft Teams video conference calls from living rooms and kitchen tables.

The coronavirus also derailed the cadence of pre-launch activities. The Polestar 2 marketing campaign was put on hold until June 1, and consumer test drives were pushed to mid-July.

"It simply wasn't the right time to have a consumer engagement during the middle of a pandemic," Hembrough said.

Like other automakers, Polestar is also rethinking the way it will retail and service vehicles in the new normal of physical distancing and ultravigilant customers.

"We are learning a lot in a short amount of time," Hembrough said. "Touchless delivery and touchless test drives are things we are planning at this point. How do we ensure consumer peace of mind that the vehicle they're getting into meets the health conditions they would expect?"

The Polestar 2 is powered by a 78-kilowatt-hour battery and delivers 408 hp, with an estimated full-charge range of 275 miles. The sedan takes a leap in connectivity with the first use in a production car of Google's new Android Automotive for its infotainment system.

"The Polestar 2 is a messenger of things to come," Hembrough said.

Polestar declined to reveal sales targets for the year or say how many advance reservations are on the books. But about half of the 2020 allotment for the U.S. has been spoken for. Early interest in the electric sedan is coming from customers of Tesla and European luxury brands. Polestar anticipates a 60 to 65 percent lease rate.

In addition to launching the brand during shelter-in-place orders, Polestar must bring a franchised retail network to life.

The automaker is shunning the traditional retail model in favor of selling its cars online only. But it is not shunning dealers.

Polestar will have small, low-cost "spaces" in malls and mixed-use urban developments instead of Taj Mahal-style showrooms with expansive service centers. The stores, which will be 2,000- to 2,500-square-foot information centers, will be run by franchised dealers selected from Volvo's retail network. Polestar vehicles will be serviced at the dealers' Volvo stores.

The retail network will first appear in four EV-friendly metros — San Francisco; San Jose, Calif.; Los Angeles; and New York.

By late 2021, Polestar plans to have stores in 12 U.S. markets.

Price Simms Auto Group was "within days" of securing leases for Polestar stores in San Francisco and San Jose, co-owner Adam Simms said last week. The dealership group, which has nine stores in the Bay Area, ranks No. 95 on Automotive News' list of the top 150 dealership groups based in the U.S., with 2019 retail sales of 10,762 new vehicles.

But the San Francisco Bay Area was the first region in the country to lock down via shelter-in-place orders and has been cautious about reopening.

"March is when we really realized the potential impact of coronavirus on our business," Simms said. "We put everything on freeze immediately because we needed to get clarity on what the marketplace was going to be like."

Simms is bullish on Polestar, given California's embrace of EVs and the brand's digital-first franchise model.

"We think Polestar strikes a balance between the existing dealer network and evolving shopping patterns," Simms said.

Its digital-first retail approach, once viewed with skepticism by the industry, now seems tailor-made for a post-pandemic world where customers expect a low-touch experience.