U.S. manufacturing also insulates an auto maker from the vagaries of geopolitical tensions and tit-for-tat trade tariffs—concerns that rattled industry planning during the Trump administration.
By building the Polestar 3 in the U.S., the brand will avoid the 27.5 percent tariff levied on its China-made Polestar 2 fastback imported to the U.S.
Tariffs were "one of the variables in the economic calculation," Polestar CEO Thomas Ingenlath told Automotive News.
The manufacturer is absorbing some of the Polestar 2's tariff cost to keep the starting price of $61,400, including shipping, competitive. But Polestar could take an even bigger profit hit from tariffs when it brings a mid-$40,000, single-motor version to the U.S. in the fourth quarter.
Sustainability was another motivator. "Producing where you sell the cars is a very favorable setup if you want to reduce your CO2 footprint," Ingenlath said.
U.S. production of the Polestar 3 puts the crossover close to what the auto maker expects to be its primary market. Crossovers are the largest vehicle segment in the U.S., according to the Automotive News Research & Data Center.
Other auto makers share Polestar's thinking for the U.S. Nissan Motor Co. produced its first U.S. market EV, the Leaf, in Smyrna, Tenn., in 2012—requiring a $1.6 billion investment in new manufacturing capabilities. Honda Motor Co. said this year it will rely on a U.S. manufacturing deal with General Motors to obtain new EVs for its Honda and Acura brands. Mercedes-Benz plans to introduce new EV models from its plant in Vance, Ala., where it is constructing a $1 billion battery module plant to support the effort.
Hyundai Motor Group has committed $7.4 billion to U.S. investment necessary to increase its position in EVs, although it has not said how that money will be used. GM last week said it is boosting its investment plans for EVs and autonomous driving technology to $35 billion through 2025, a 30 percent increase over plans announced in November.
"GM is targeting annual global EV sales of more than 1 million by 2025, and we are increasing our investment to scale faster because we see momentum building in the United States for electrification," CEO Mary Barra said in a statement.
Batteries not included
Jeff Schuster, president of global forecasting at LMC Automotive, said EVs have the potential to "contribute to a renaissance in U.S. production growth."
A key part of that surge—and another factor in auto makers' willingness to put EV factory lines in the U.S.—is the location of the plants that produce the batteries necessary to power the new vehicles.
There are just three battery cell manufacturing plants operating in the U.S.—in Michigan, Nevada and Tennessee. But a wave of new battery plants is coming, and the plants are expensive.
GM said it will spend $2.3 billion with battery partner LG Energy Solution to build a plant in Spring Hill, Tenn. The partners have a separate battery project under construction in Lordstown, Ohio.
South Korea's SK Innovation will soon open a battery plant in Commerce, Ga., that will supply Volkswagen's U.S. EV plants as well as some of Ford Motor Co.'s. SK's project is set to cost $2.5 billion, but the company expects to double that investment a few years from now.
Guidehouse Insights estimates that current and planned EV battery projects will total $35 billion in investments.
No legacy capacity
Those projects illustrate another reason EV manufacturing is following a different rulebook from past traditional vehicle planning.
Until now, auto makers had existing engine plants and engine platforms available to create new vehicles or to assemble cars that would be sold in the United States. Japan, Europe and South Korea had ample capacity for engine production.
But because EV models are relatively new, there isn't a robust battery supply infrastructure in the U.S. to support them. Virtually every new EV that will come to U.S. showrooms in the coming decade will require new battery manufacturing capacity to make it possible.
When deciding where to build EVs, there are several considerations, including logistics. An assembly plant near battery cell factories or EV systems suppliers may be prioritized over one that is farther away, Robinet said.
"You're going to want to make sure it's as close as possible to reduce costs," he said.
It may help Polestar in South Carolina that one of the auto maker's investors is the South Korean conglomerate SK Inc., which owns SK Innovation. SK's new plant is 250 miles from Polestar's future assembly line.
Polestar's Ingenlath declined to comment on whether SK would supply the batteries for the South Carolina-made Polestar 3s.
But he noted that other critical component suppliers have also stepped up with new investment in EV technologies, and that will make it easier for Polestar to create its U.S. supply chain.
"Now, when it comes to sourcing Polestar 3, that supply chain has already heavily" electrified, Ingenlath said. "The Bosches, the Continentals, the Hellas of this world are ... adjusting their product offer."