Polestar plans to produce its upcoming Polestar 7 compact SUV in Europe beginning in 2028, shifting manufacturing closer to its fastest-growing market. The vehicle will compete in the compact premium SUV segment, the largest EV category in Europe by sales volume.
The manufacturing move represents Polestar's first European production facility for its vehicles. European markets accounted for significant portions of the brand's global deliveries, with compact SUVs dominating EV registrations across Germany, France, and the UK.
The Polestar 7 will face established competitors including Tesla's Model Y, Volkswagen's ID.4, and BMW's iX3 in the premium compact segment. European EV registrations in this category grew 40% year-over-year in 2024, driven by fleet buyers and company car programs.
Local production could reduce delivery times and logistics costs while qualifying vehicles for regional incentives. Several EU member states offer purchase subsidies for EVs assembled within the union, with amounts ranging from €3,000 to €9,000 depending on the country.
Polestar, owned by Volvo Cars and Geely, has expanded its European dealer network to over 150 locations. The brand launched four new models between 2023 and 2025, including the Polestar 3 SUV and Polestar 4 crossover.
European governments have set 2035 as the deadline for ending new combustion engine car sales. The regulation has accelerated automaker investments in EV production capacity across the continent. Volkswagen, Stellantis, and Renault have committed €50 billion combined to European battery and EV manufacturing through 2030.
The compact SUV segment appeals to European buyers due to urban parking compatibility and moderate pricing compared to larger models. Average transaction prices for premium compact EVs in Europe range from €45,000 to €65,000.
Polestar has not disclosed which European country will host the Polestar 7 production facility. Potential locations include existing Volvo plants in Belgium and Sweden, or new dedicated facilities in Central European automotive hubs.