Digital, Hassle-Free Polestar Retail Model Needs Dealers

When Polestar promised to change “the face of the traditional automotive retail model,” it was supposed to be digital and hassle-free. So much so that it reminded us of what Tesla does. That was the case for many clients, especially the ones that started this Reddit thread. They were negatively surprised after receiving an email message on May 6 from the company. It said these customers would have to choose among three Polestar Spaces in the US: Los Angeles, New York, or San Francisco. Some of them live more than 1,000 miles from any of these cities. The reason they have to choose a Polestar Space is that the company’s retail model looks like Tesla’s, but it is closer to Volvo’s: Polestar will have dealerships.

Ordering a Tesla demands you to give the company your address and pay a $1,200 transportation fee. Tesla is responsible for delivering the car. When the vehicle is ready to be shipped, the closest Tesla Service Center – which belongs to the carmaker – gets in touch. You can either pick your car up there or have it delivered to your house at no extra cost in states that do not forbid Tesla to sell directly to customers. That is not possible in Alabama, Connecticut, Louisiana, Nebraska, New Mexico, Oklahoma, South Carolina, Texas, West Virginia, and Wisconsin.

If you choose a Polestar, you also order the car online or with an app, whether at home or a Polestar Space. The company promises to deliver the vehicles from September on and to charge $1,300 for the transportation fee. The slightly higher value is just the start of the differences.

After reading the email message we already mentioned – pictured above – customers living far from these Polestar Spaces got in touch with the company by phone. They wanted to understand why they would have to choose one of the three Polestar Spaces to secure their “prioritized production slot.” That was when they were informed they could receive their cars at home with no additional cost if they were within a 150 mi radius from the chosen Polestar Space. First, they were informed they would have to live 100 mi from the Polestar Space, but that information changed. Some of them, such as stolinski, live more than 1,000 miles away from the closest one. The Reddit thread made Polestar publish an emergency press release to avoid image damages. 

The bottom line is that these clients have to make this choice because the delivery of their cars is not Polestar’s responsibility. The dealerships have to deal with it. For customers that live “beyond the 150-mile delivery radius, the closest Polestar Space will work to provide the most convenient solution for their needs.” That means they will have to pay an extra to have their cars shipped to them on top of the $1,300 transportation fee – if they are in a rush to get the car, at least.

We spoke to ajakowenko, from the Reddit thread. He lives in San Diego, California. Here’s what the Polestar representative told him on the phone:

“It’s possible that if you are only 10 or 20 miles beyond that threshold, they may not charge you or may only charge you a very small nominal fee, but it’s unclear how much they would charge you if you lived in Kansas or Colorado, for example. He told me anecdotally what he is seeing is that they would probably work with a towing provider to determine a cost per mile beyond the 150 miles. He said the most he has seen in some estimations is a few hundred dollars, but nothing in the thousands. But it seems that if you’re far enough away, you will have definitely to pay to get the car. How much is to be defined and probably not standardized across the country.”

Polestar already confirmed its dealers would have to charge extra for clients beyond the 150-mi radius. Still, it also said that the Polestar Spaces opening in 2020 in the US – NY, LA, and San Francisco – will have 65% of its preorders in a radius of 150 miles. Canada will have Polestar Spaces within 150 mi of 90% of the preorders, and all of them will open in 2020. In 2021, Polestar will open Spaces in Texas, Massachusetts (Boston), Colorado (Denver), Washington DC, and Florida – Miami, perhaps? Anyway, the hassle-free part of the deal was not accomplished for the other 35% preorder holders, at least not in 2020. It was not met even if you live within the 150-mi radius, as ajakowenko does. It was a matter of expectations.

“I don’t recall the words ‘direct-sales model’ ever coming up though. But it’s basically like Tesla… Go to a Polestar Space and learn more, order there if you like… or order online.”

San Diego is within the 150 mi range from the LA Polestar Space, but ajakowenko is concerned about servicing the car. It is not clear if Polestar will provide a loaner, for example, hence the hassle in his case.

For reservation holders that do live beyond the 150-mi limit, why have they been contacted now? Why didn’t Polestar wait to contact them when its Spaces open nearby? Why ask them now to choose a Polestar Space that is 1,000 mi distant in the best-case scenario?

The hassle can be even more significant if Polestar does not manage to attract enough dealers to its retail model. It promises all 50 states will be able to buy a Polestar, but can it have a dealer in each of them? To answer that, we would have to know how these dealerships will monetize their efforts, and that is not clear.

The company will have both Polestar Spaces and Polestar Service Centers. The Spaces are showrooms with “non-commissioned product specialists” dedicated to presenting the cars. They also have to handle the paperwork, which makes them act like dealerships. But how do they make money? Do they earn a commission for each car they deliver?

Polestar Service Centers provide a more evident income source. They may be standalone workshops or shared with some Volvo service points, but this brings even more doubts to the table. Considering EVs need a lot less maintenance than regular cars, would a standalone Polestar Service Center make enough money to survive without belonging to the automaker? They may not even be connected to Polestar Spaces, which seem to be the real dealerships. If they don’t make money selling or servicing cars, what is in there for them?

Although this is not a Polestar client’s problem, it may eventually be. If the dealership near their home closes, how will they service their cars? If you want to buy a Polestar, how much will you have to pay to receive it? The company may need to clarify that. Making its retail model look like Tesla’s will make customers expect it to work as such. And it doesn’t.

Gustavo Henrique Ruffo

I have been an automotive journalist since 1998 and have worked for many important Brazilian newspapers and magazines, such as the local edition of Car and Driver and Quatro Rodas, Brazilian's biggest car magazine. I have also worked for foreign websites, such as World Car Fans and won a few journalism prizes, among them three SAE Journalism Awards and the 2017 IAM RoadSmart Safety Award. I am the author of "The Traffic Cholesterol", a book about bad drivers that you can buy at Hotmart, Google Play, Amazon and Kobo.

Secured By miniOrange