What you need to know:

• Polestar is only three years old as a standalone all-electric car brand. It’s already launched four models.
• The challenge is, Australia’s electric vehicle sales have cooled just as it’s ramping up. Meanwhile more competitors are hitting the market – and spending hard.
• Boss Scott Maynard isn’t worried. He thinks it will easily double sales within the next two to three years – with sustainability a key driver.
• Other brands might have greater brand recognition and trust, but they are are “dabbling” when it comes to electric vehicles – and they almost certainly haven’t mapped every single component and its carbon footprint from cradle to grave.
• Do consumers really care? Some don’t he admits – they just want a really good looking, fast and fully specced car. But others do – and Maynard thinks sustainability is going to drive growth, and has zero fear of being pinged by regulators for greenwash.

Ute of today

Australia loves a sports utility vehicle even more than it loves a proper ute.

In the first nine months of the year, 58 per cent of all vehicles sold, or 520,925 of 927,246, were SUVs according to Federal Chamber of Automotive Industries (FCAI) data. Technically that percentage is higher, because Tesla doesn’t report its numbers to the FCAI after a falling out over perceived lobbying to water down Australia’s incoming emissions standards. Tesla’s model Y is classed as an SUV – and it had sold 14,997 of them to 30 September, per the Electric Vehicle Council.

Either way, SUVs sold more than double the number of light commercial vehicles sold to Q3 2024 (207,808), of which the vast majority (157,146) are 4×4 utes (dominated by Ford’s Ranger, followed by Toyota’s HiLux, Isuzu’s D-Max and Mitsubishi’s Triton). Add in 20,291 two-wheel drive utes sold to 30 September and the numbers show SUVs are now outselling utes by roughly three to one – all but displacing wagons while squeezing out sedans.

Hence electric vehicle manufacturer Polestar launching an SUV, the Polestar 3, a few months ago.

Timing issues

The challenge is the Polestar 3 arrived just as ‘pure’ battery electric vehicle sales – BEVs as the auto industry calls them – dipped, down 6.8 per cent year-on-year to 30 September across all vehicle types, and back 22.7 per cent within SUVs. Conversely, plug in hybrids, or PHEVs, are powering – up 122.9 per cent within the SUV market.

Which means Polestar MD Scott Maynard – who joined the company in July from rival EV maker BYD following long stints at Audi and Jaguar Land Rover – has his work cut out as the company launches its next model: The sleek, fast Polestar 4 mid-sized SUV (0-100kmh in 3.8 seconds, no rear window), which last week arrived in Australia.

But he’s confident. “If we don’t double sales in the next two to three years,” Maynard told Mi3. “I’ll eat my hat.” (His comms chief, instructing Maynard not to reveal any numbers or targets, put her head in her hands.)

Polestar is launching another new model late next year – the Polestar 5 grand tourer (very fast, very sleek) and will double its dealer/partner network as of 1 January.

Maynard thinks there’s still ample demand from people who want to drive a more sustainable car – provided it’s fast, high spec and looks good – to hit those numbers (which would still be shy of 4,000 cars a year, given Polestar sold 1,785 in 2023 and bar a bumper Christmas will be stretched to beat that this year.)

Unlike many rivals now pushing into EVs (“dabbling”, per Maynard), Polestar has genuine sustainability credentials. While the marketing industry is now silent on ESG, Maynard’s not afraid of getting busted by regulators for greenwashing.

That’s because Polestar started from scratch and mapped every aspect of every single component from source – try asking other dealers “if they know where their cobalt comes from”, suggests Maynard. It’s also calculated CO2 emissions from cradle to grave of each of its cars, including the miles they will travel and end of life disposal. That’s around 50 tonnes for the Polestar 2 and 44 tonnes for the Polestar 3, “remarkable, because it’s a substantially larger car,” per Maynard. It’s aiming to make a ‘carbon neutral’ car by 2030, the Polestar Zero.

Brand v demand

Though bullish, Maynard recognises there are some significant speedbumps: Polestar has to build a new brand versus rivals with a century head start, and, as the firm’s balance sheet underlines, starting an electric car company is an expensive business.

Each technical teething issue and delivery delay has markets and investors twitching. Meanwhile, Australia’s charging infrastructure remains underdeveloped – with concerns over charging and ‘range anxiety’ intrinsically linked and, per latest NRMA data, a major consumer barrier to buying an EV.

Plus, rival carmakers don’t want to be pushed into decarbonising faster, given they have a century’s worth of fossil-fuelled IP to protect – which is why Polestar also walked away from the FCAI along with Telsa. (Polestar’s ex-boss Samantha Johnson left to join the Electric Vehicle Council, paving the way for Maynard to take the hot seat.) In fairness, there are massive costs to ditching internal combustion engines, and China’s ambition to dominate the automotive industry at all costs intensifies existential pressure.

But those rival carmakers would also point to basic supply and demand economics: fewer Australian consumers this year are choosing ‘pure’ EVs than last, and per NRMA’s survey, only 20 per cent of Australians planning to buy a car in the next five years are considering an EV.

The flip side is that if electric vehicle makers could convert all of that intent to hard sales, it would mean 2.5x EV growth by 2029 – given pure EVs now make up about 8 per cent of new car sales. Plus boomers (the least likely to buy EVs, per NRMA’s data) will die off and younger people (the most likely to buy) might be able to afford one. Especially if they inherit the boomers’ houses.

Tax windfall

Australia’s New Vehicle Emissions Standard (NVES) – the legislation that caused the ructions  between Tesla, Polestar and the FCAI – may also accelerate EV sales over the next couple of years.

NVES penalises carmakers with the least fuel-efficient, higher emitting vehicles – and crucially, it weighs up combined emissions of all vehicles sold by each manufacturer. It sets a CO2 emission limit per kilometre across the fleet with steep penalties – $100 per gram of CO2 – for going above that limit.

(1 gram of CO2 is the equivalent of driving out of the garage, or 4-5 meters in the average ute).

In theory it means firms that predominantly sell gas guzzling heavier vehicles face big penalties, especially if they have relatively few EVs and lower emissions hybrids to help average down their CO2 number.  However, the government weakened the standard in March – setting a higher CO2 threshold for utes and vans after campaigning by carmakers and opposition parties that it was imposing a ‘ute tax’ (a tactic that’s worked perfectly in the past) and some questionable sums that suggested it would add $6,000 to the cost of a Ford Ranger. Under the new weaker NVES thresholds for light commercial vehicles, many of the popular utes – bar V6 versions – will clear the bar in year one. 

How strictly the NVES, which kicks in from 1 Jan 2025, is enforced remains to be seen. But it could prove a boon for the likes of Polestar – because rather than pay the $100 per gram of CO2 penalty, carmakers over their limit can buy credits from those under their fleet threshold.

Polestar counts as having zero tailpipe emissions, so will have a surplus. In theory, it could gain significant trading revenues, while taking money off competitors in the process – handy for marketing budget in a high spending category. Competitors over their CO2 limits will have to decide whether to swallow the cost or pass it on to consumers.

Performance play

The standard is designed to incentivise carmakers to bring lower emissions vehicles to Australia – which has long been a dumping ground for higher emissions vehicles as manufacturers prioritised markets with more stringent rules and targets. As one of the only developed economies without an emissions standard (along with Russia) Australia was literally at the back of the queue for less polluting cars.

Now carmakers have an incentive to bring smaller, cleaner cars to Australia – which likely means more electric vehicles – to balance their portfolio-wide emissions and avoid extra costs. Which means more competition for the likes of Polestar.

But Maynard isn’t overly concerned. He says Polestar isn’t competing with the mass brands: “The area we operate in, the upper premium market, behaves a little differently to the entry level and volume side.”

He also thinks genuine sustainability credentials will set it apart in an increasingly crowded EV market – especially as those credentials don’t compromise vehicle style or performance.

“We can now present you with a product that has better performance than most sports cars, but still rewards you with a much kinder footprint to the planet. That is now reaching a much broader market,” said Maynard.

Polestar could make a vehicle with an even lower total carbon footprint, “but it would look different and drive differently – and nobody would buy it, we wouldn’t achieve our goal and the overall effect would be minimal,” added Maynard. “It’s a fine line we have to dance to build a product that’s consumable and attractive so that we can have a marked effect on the overall CO2 output of Australia’s motoring fleet.”

Disingenuous journos?

Maynard blames the media for fuelling a narrative of cooling EV demand.

“A lot of that comes from stories about what the likely life of a battery is, what ‘the extraordinary cost’ of replacing a battery is. So many of those stories are not balanced by a comparison between the cost of an engine and gearbox assembly in a modern car, how long they last, or what the average lifespan of a of a diesel engine is. That doesn’t seem to be happening,” he said.

“It’s selective reporting. If an electrical vehicle catches fire, it’s all over the news, but if you actually look at the stats and compare the number of vehicles that burst into flames, carrying a tank full of petrol and diesel… you just don’t you don’t see it. So there is no doubt in my mind that selective reporting is having an impact on consumer confidence and the speed of take up of electric vehicles, for sure.”

(In the interest of non-selective reporting, a petrol or diesel car is around 100 times more likely to catch fire in Australia than an electric vehicle.)

Tax appeal

While the Polestar 3 launched the brand into the SUV market – it’s a big, expensive car, with the cheapest model coming in at $133,000. “The price range that competes in puts us in some fairly thin air,” Maynard acknowledges.

But the Polestar 4 starts at $78,500, with even the most expensive version, at $91,387 coming in under the Luxury Car Tax threshold. That means it can be salary sacrificed by company car drivers under Fringe benefit Tax rules, with massive growth in salary sacrificing and novated leasing now making many carmakers, including BMW, increasingly B2B sales and marketing operations. (Notably, those tax benefits end next year for plug-in hybrid electric vehicles, which could repower EV growth rates.)

Trust challenge

The lower price point opens up a larger SUV market and it’s the BMWs, Mercedes and other premium marks that the Polestar 4 “is squarely pitching and competing against,” said Maynard.

While the car competes on performance, spec and finish, he acknowledges those European manufacturers have a big advantage: Brand.

“There’s still plenty of work to do there. We have a three-year history compared to the historical volume of sales in the Australian market that those brands enjoy. We’re working hard to build that same level of trust and confidence in our buyers that those brands have got simply by tenure – but there is absolutely some work to do there.”

However, for buyers that want a high grade, luxury electric vehicle, Maynard thinks those rival brands are at a disadvantage precisely because of their fossil-fuelled heritage.

“There are some great credentials Polestar carries that they lack. We don’t just dabble in EV, this is the core of what we do. All of the engineering effort, everything that we do, pushes to EV. We’re an EV specialist brand, sitting in that set with absolutely bona fide, demonstrable credentials in sustainability.  There has to be a point of difference if you’re gong to run with that set and chase a discerning customer.”

Sustainability vs hotness

Does sustainability genuinely sell the car to its core market – do people really care to the tune of $80k and up?

“It’s probably fair to say not all of them do. Some of them just love the car because it looks great and drives well and has everything they want. But to more and more people it does,” said Maynard.

“It seems to me that it’s finally becoming apparent to most people that we just can’t keep living the way that we have and that we need to look at alternatives to be able to continue to do things the way that we’re doing them.

“I’m buoyed by the fact that more and more of our consumers are looking for a car that’s not going to harm the planet like their last one did – so it’s catching on. I do think there’s a bright future for us there, if we can continue to demonstrate and prove that message, because more and more people are looking for it.”

He thinks few if any other brands have that credibility.

“It’s transparency we’ve had right from the beginning. That is very important.”

Maynard will use those sustainability and transparency credentials within channels and go to market strategy. But he underlines that the cars’ overall hotness will convert even those whose principles can be severely tested by aesthetics and prestige.

“The Polestar 3 – and the 4 – it’s such a beautiful car. I’d like to think it’s the kind of car you’d turn electric for. It’s such a great car to drive, it looks so good; it will attract a buyer regardless of its drivetrain.”

He’s confident there will be no hat eating in couple of year’s time. Either way, as Polestar 4’s lack of rear window suggests, the company won’t be looking backwards.