Polestar will produce its Polestar 7 compact SUV in Europe from 2028, the first European manufacturing facility for the Volvo-Geely owned brand. The vehicle targets the continent's largest EV category, where compact SUVs grew 40% year-over-year in 2024 across Germany, France, and the UK.
Local production positions Polestar to compete directly with Tesla's Model Y, Volkswagen's ID.4, and BMW's iX3 in the €45,000-€65,000 premium segment. European manufacturing qualifies vehicles for national subsidies between €3,000 and €9,000, available only for EU-assembled EVs in several member states.
The decision reflects Europe's position as Polestar's fastest-growing market, accounting for significant portions of the brand's global deliveries. Compact SUVs dominate European EV sales due to urban parking compatibility and moderate pricing compared to larger models—factors particularly relevant in space-constrained cities from Amsterdam to Rome.
Polestar has not announced which country will host production. Candidate sites include existing Volvo plants in Belgium and Sweden, or new facilities in Central European automotive hubs like Slovakia or Hungary, where competitors have concentrated recent investments.
The 2028 timeline aligns with Europe's 2035 ban on new combustion engine sales, which has triggered €50 billion in combined investments from Volkswagen, Stellantis, and Renault for European EV and battery production. Fleet buyers and company car programs drove much of 2024's growth in the compact SUV segment.
Polestar expanded its European dealer network to over 150 locations and launched four models between 2023 and 2025, including the Polestar 3 SUV and Polestar 4 crossover. Local production could reduce delivery times and logistics costs while strengthening the brand's position against established European and American competitors in the world's second-largest EV market after China.