October 22, 2021

StrategisChhr

Skillful Business Crafters

Why this billionaire investor is all in on one electric vehicle maker

For investing pioneer Alec Gores — who has made his name in recent years via very successful SPAC transactions with Hostess and Luminar — cutting a large check to help bring upstart electric vehicle maker Polestar public just makes good sense. 

It simply checks all the boxes, Gores says.

“We literally see so many deals. The first thing is we vet things out quickly. Then we have a lot of conversations around things we find. The art is to start with a great company with the potential to be the leader in the space. Then you go to the management team, then to the product, a great product, and revenues, projections all of these things have to meet. Most important we have to be aligned with the management team. In this case Thomas [Ingenlath, Polestar CEO] and their team is incredible. Also having the Volvo relationship helps here,” Gores explained on Yahoo Finance Live, referring to his selection process for doing a SPAC deal with Polestar.

Visitors discovar a Polestar 2 car at the International Motor Show (IAA) in Munich, southern Germany, on September 10, 2021. – Germany’s revamped IAA auto show, one of the world’s largest, is celebrating all things car-related, but climate concerns and pandemic woes threaten to spoil the party. (Photo by Tobias Schwarz / AFP) (Photo by TOBIAS SCHWARZ/AFP via Getty Images)

The Swedish electric car maker Polestar (an offshoot from Volvo) said this week it will go public by merging with a SPAC created by Gores and investment bank Guggenheim. The merger with the Gores Guggenheim SPAC assigns Polestar a $20 billion enterprise value. It includes $800 million in cash from Gores Guggenheim that will go toward Polestar ramping up production of its current model line and developing more offerings.

Polestar expects to reach breakeven by 2023, according to its investor presentation. The company forecasts hitting $17.8 billion in sales by the end of 2025, driving $1.6 billion in operating profits. 

“This is a company that delivers — we actually deliver cars. We have had 29,000 deliveries this year. I think that proven track record led Alec and his team to believe we will deliver on our projections,” Ingenlath told Yahoo Finance Live.

Added Gores, “We are super excited about this. We believe in this. Thomas and the team will be one of the leaders in the space. We have a lot of convictions in the revenues. It’s a real car, not a concept.”

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YouTube, and reddit


https://finance.yahoo.com/news/why-this-billionaire-investor-is-all-in-on-one-electric-vehicle-maker-165305145.html