Geely’s Polestar plans China expansion to compete with Tesla: sources

Polestar, the premium electric vehicle maker owned by China’s Geely, plans a big expansion of its showroom network in the Chinese mainland, sources said, as it prepares for delivery of cars to compete with Tesla Inc’s locally made Model 3.

Showroom strength is becoming an important differentiator for electric vehicle (EV) makers in the world’s biggest auto and EV market, as they line up new model launches.

Polestar, which plans to deliver Polestar 2 electric sedans in China from July, currently has one showroom, in Beijing. It plans to have 20 showrooms, with most of them opening in the third quarter of this year.

Unlike sales of cars through dealers that most traditional automakers rely on, Polestar will sell directly to customers, a strategy also pursued by other EV makers including Tesla, Nio Inc and Xpeng Motors, backed by Alibaba.

Direct sales to customers can help automakers better manage a car’s retail price and its production and inventory. However, it also adds to costs if automakers need to invest in self-owned showrooms like Tesla.

Polestar, however, will work with investors to build and operate the showrooms while still managing sales and delivery of cars, said the people, who spoke on condition of anonymity as the plan is not public.

The automaker, based in Sweden, started producing Polestar 2 sedans earlier this year in China and will also export them to Europe and the US.

It will open showrooms firstly in East China’s Shanghai and then expand to coastal Ningbo in East China’s Zhejiang Province, North China’s Tianjin and Guangzhou in South China’s Guangdong Province. The showrooms will be mostly in shopping malls.

In China, Tesla has over 50 showrooms. Nio operates around 110 showrooms, with some of the properties belonging to partners. Xpeng plans to have over 200 outlets by the end of the year from about 150 now, many of them belonging to partners.