Benzinga | Sep 27, 2021 05:35AM EDT

Tesla Rival Polestar Could Reach $21B Deal To Merge With SPAC Gores Guggenheim Today: WSJ

Electric vehicle maker Polestar could reach a deal to go public with special purpose acquisition company Gores Guggenheim Inc (NASDAQ:GGPI) on Monday, Wall Street Journal reported, citing people familiar with the matter.

What Happened: The deal is expected value the Zhejiang Geely Holding Group Co (OTC:GELYF) and Volvo Cars Group-backed Swedish company at $21 billion and could be one of the largest recent SPAC deals in the recent past.

Polestar was launched in 2017 and has a manufacturing facility in China.

Polestar, seen as Tesla Inc (NASDAQ:TSLA) rival, counts actor Leonardo DiCaprio as an investor. As per the WSJ report, existing investors will receive an additional $250 million investment as part of the deal.

Why It Matters: The latest valuation number is a significant markdown from earlier this year when the Hangzhou-based Zhejiang Geely Group reportedly planned to list Polestar for as much as $40 billion, as per a WSJ report in April.

Polestar had in October recalled all of its Polestar 2 electric vehicles -- marketed as a rival to Tesla's Model 3 -- to fix a software glitch that could cause the vehicle to lose power while driving. Earlier this year, Polestar said it would assemble its third model at a Volvo plant in South Carolina.

Geely is playing catch-up in the electric vehicle space with rivals such as Tesla, BYD Co (OTC:BYDDF) and others establishing themselves.

The company also faces intense competition from homegrown electric vehicle startups such as Li Auto Inc (NASDAQ:LI) and Nio Inc (NYSE:NIO).

Price Action: Geely Automobile shares closed 1.84% lower at $2.93 on Friday.

Photo: Courtesy of Polestar