Tesla rival Polestar plans own smartphone launch alongside its first electric SUV in China

MUNICH — Swedish electric vehicle maker Polestar plans to launch a smartphone in December alongside deliveries of its first sports utility vehicle to be released in China, the company’s CEO told CNBC.

The move underscores the way in which EV makers launching in China are putting technology at the heart of their offering in a market where car buyers want the latest features.

The Polestar 4 is a (SUV) coupe. It will be the company’s third model to be sold in China, as it ramps up expansion in the world’s biggest electric vehicle market.

Thomas Ingenlath, CEO of Polestar, told CNBC the company plans to start production of the Polestar 4 this year for the Chinese market with deliveries slated for the end of this year. Alongside that, Polestar will take the unusual move of launching a smartphone carrying the brand’s name.

It stems from a joint venture created in June between Polestar and Xingji Meizu, a Chinese smartphone maker owned by Chinese auto giant Geely.

Meizu is not a major smartphone player in China with companies like Apple and Oppo among the biggest. And the Polestar smartphone would not be an attempt to grow market share.

Instead, the unusual step of an EV company launching a smartphone comes from a desire from automakers to make the car like a mobile phone on wheels.

“Where you have an opportunity to link these two worlds, without any border … then you can really have a seamless transition,” Ingenlath said.

You can imagine a world where you’re using an app on your phone and you enter the car and that same app is displayed on the car’s dashboard screen, for example.

“I still have problems to get, you know, an SMS displayed,” Ingenlath said of the frustrations with current technology.

Ingenlath added that the phone will be a “premium” device. Meizu is known in China for more mid-tier devices. This will help Meizu push into the high-end device market for handsets too, Ingenlath said.

While it is still unusual for car companies to launch phones, the idea is gaining some traction. Chinese EV start-up Nio plans to launch its first self-developed mobile phone in September.

There are lots of reasons this could make sense specifically in the world’s second largest economy.

Firstly, there is no Google Android mobile operating system. This means that automakers can customize the operating system on their phone and the car to sync up. For example, Meizu has its own operating system called FlyMe. And the company is making an operating system for Polestar cars based on this.

The smartphone that Polestar releases is also likely to have a similar OS which will make integration seamless.

“It’s not just good enough to bring a great European design to China, you have to be very, very special about what you offer to the market when it comes to software,” Ingenlath said.

“Many OEMs are following Geely and potentially other future players such as Apple if they come up with their own car with their smartphone to provide a holistic and tighter connected experience in every aspect of mobility,” Neil Shah, vice president of research at Counterpoint Research, told CNBC.

An OEM is an original equipment manufacturer and refers to car manufacturers.

Shah said the smartphone would also allow Polestar to bundle software, apps, services and features such as remotely controlling or turning on the car with a phone.

Launching a phone could also help carmakers learn more about their customers’ habits, Shah added.

The Polestar 4 is on sale in China for 349,800 Chinese yuan ($47,890) — that’s more expensive than Tesla’s Model Y which starts at 263,900 yuan.

The Polestar 4 is being positioned as “more premium, more luxurious” than the Model Y, Ingenlath said.

The CEO said Polestar’s customers come from German carmakers BMW and Mercedes-Benz and that the car is being positioned more as a competitor to cars like the Porsche Macan.

Polestar started in 2017 as a joint venture between Sweden’s Volvo Cars and Geely. The backing of Geely and its ownership of Meizu will no doubt help Polestar’s entrance into the Chinese market with car and smartphone.

But the Swedish firm will face stiff competition in China from a plethora of companies playing in the segment of the market that Polestar is, including Nio, Xpeng and Tesla.

Ingenlath said the company will release the Polestar 3 in China after deliveries of the Polestar 4. The Polestar 3 is an electric SUV, but it has been hit with production delays.

Correction: This story has been updated to reflect that the Polestar 4 will be the company’s third model to be sold in China.