Geely-backed Polestar is reviewing its strategy in Canada in the wake of the new trade agreement between Ottawa and Beijing, following months of pressure from import tariffs both to and from China and the United States.
The premium EV maker plans to balance Polestar 4 imports from South Korea with Polestar 3 shipments from the US, despite the 25% tariff on auto parts and vehicles introduced last year.
With the new 6.1% tariff agreed between China and Canada, the company may also have an opportunity to reintroduce the Polestar 2 sedan in the market, which is currently only available as pre-owned units.
Last month, Geely‘s brand Lotus said Canada’s decision to slash tariffs on Chinese-made EVs would allow the company to cut the planned retail price of its Eletre SUV by “approximately 50%.”
Additionally, Volvo revealed last week that it is “looking into” taking advantage of the import quota of 49,000 China-produced vehicles entering Canada each year.
Polestar and Volvo imported significant numbers of Chinese-made electric vehicles into Canada until 2024.
By then, the country implemented 100% tariffs on these vehicles, aligning its policy with the duties imposed by the Biden Administration.
South Korean Imports
According to Automotive News on Tuesday, the brand will focus on the Polestar 4 during the first half of the year, as production in South Korea allows the company to avoid import tariffs on the model.
The EV maker revealed late last year that the first batch of Polestar 4 vehicles produced in Busan — in collaboration with Renault Korea — had already been shipped to Canada.
“We’re still assessing the situation at the moment, so I can’t comment any further,” Polestar’s country manager in Canada Hugues Bissonnette told the media outlet.
The Canadian government has been turning to international partners to grow its auto industry as its relations with the United States deteriorate.
Last month, Canada signed a memorandum of understanding (MOU) with South Korea to promote mutual industrial collaboration.
US Imports
According to the country chief, the company is planning to source the upcoming iteration of the Polestar 3 from Volvo‘s South Carolina plant — where Polestar currently produces the model.
The model is built on Volvo‘s Scalable Product Architecture 2 (SPA2), alongside the large EX90 SUV.
Volvo halted imports of its US-made model to Canada last year after tariffs between the two countries took effect.
It is now considering reintroducing the model, shipping it from China instead, under the 49,000-vehicle annual import quota set by the Ottawa-Beijing trade deal.
Bissonnette said Polestar will limit the impact of the tariffs on the consumer.
“We need to remain competitive,” he justified. “It’s a competitive segment out there, and our offer is going to remain more or less in line with where the market is today.”
Off-Lease Sales
The trade scenario led Polestar to focus on off-lease vehicle sales.
Through its website, users can purchase previously leased (and now returned) units of the Polestar 2 and Polestar 3 models, as imports of new vehicles became limited.
Bissonnette said that a high volume of models returning after 12-, 24-, and 36-month leases is a “good revenue generator” for the brand’s Canadian dealers, with about 10% of lease customers purchasing their vehicles at the end of the contract.
While this could indicate low interest in the brand’s models, dealers still have a “good pipeline” of returning inventory, which helps offset the decline in imports.
The brand is set to release refreshed versions of its current lineup — the new Polestar 4 will be unveiled later this year, and the Polestar 2 sedan is scheduled for an early 2027 revamp.
The company has recently debuted the Polestar 5 grand tourer, with customer deliveries expected from “summer 2026,” while the launch of the compact SUV Polestar 7 — to be produced in Europe — is slated for 2028.
It remains unclear when these models will be available in Canada, as the website does not yet feature the Polestar 5 — already available for configuration across Europe and in the US.
