Up to $7,500 of federal tax credit times 200,000 translates into $1.5 billion

The Polestar brand will be considered by the Internal Revenue Service (IRS) as a separate car manufacturer according to the latest news, which means separate fromĀ Volvo's pool of 200,000 federal tax credits (up to $7,500 per car).

Polestar spokesman J.P. Canton told Green Car Reports:

"We get the full credit, the $7,500 is there and it's not attached to Volvo. We have to sell 200,000 Polestars until it runs out."

Gregor Hembrough, Polestar's head in the U.S. add:

"Polestar Automotive USA is a separate brand,"

The first all-electric model, the Polestar 2, will be introduced in Q2 2020 and is considered as a Tesla Model 3 competitor.

Assuming that 200,000 cars will qualify for up to $7,500 in federal tax credits, the differentiation between Polestar and Volvo is worth up to $1.5 billion of competitive advantage, and that is before the phase-out starts.

Depending on the pace of sales in the following several quarters, the incentive could be worth a lot more (up to two quarters at $7,500, two quarters at $3,750 and two quarters at $1,875).

Volvo so far sold just around 10,000 plug-ins in the U.S., which means that at the current pace of some 300 cars per month, is not even bothered by the limit. However, it could be decisive several years from now when newcomers/followers will be in a better position than pioneers. In other words, it seems that the federal tax credit, which helped to jump-start the plug-in car sales in the U.S., has a serious flaw.

The case of Polestar/Polestar 2 is especially interesting because it's based on the same Compact Modular Architecture (CMA) platform and will be produced in the same factory as the Volvo XC40 (which also will get electrified versions).

In total, three models will be produced the Luqiao, Zhejiang Province, China:

  • Volvo XC40 - production started this month (for Chinese market) as second place after Ghent, Belgium
  • Lynk & Co 01 SUV - already in production
  • Polestar 2 - from early 2020

As all three brands (Volvo, Polestar and Lynk & Co are highly related through Chinese owner Geely), other manufacturers might now be willing to consider to set up some kind of new joint ventures and also make use of this separate 200,000 pool of federal tax credit.

Polestar 2 specs:

  • 78 kWh battery (324 pouch cells, 27 modules, liquid cooled)
  • target 500 km (311 miles) of WLTP range
  • expected 275 miles (442 km) of EPA range
  • 0-100 km/h (62 mph) in 4.7 seconds
  • dual motor all-wheel drive
  • system output: 300 kW (408 hp) and 660 Nm of torque (two 150 kW and 330 Nm electric motors per axle)
  • 150 kW fast charging capability
  • based on Compact Modular Architecture (CMA) platform

* in China battery capacity to be 72 kWh

Gallery: Polestar 2 Debuts In China: Will Be Produced In Luqiao From 2020

Source: Green Car Reports