Excerpt
Table of Contents
Abbreviation list
1 Introduction
2 Background Information
2.1 History
2.2 Key Facts
2.3 Vision and Mission
2.4 Brand Architecture
2.5 Competitive analysis
2.5.1 Tesla
2.5.2 Lucid
3 Polestar's scale-up and its revolutionary brand strategy
3.1 Customer-based brand equity
3.2 Polestar's brand identity
3.3 Integrated marketing communication strategy
3.4 Advertising effect model
3.5 Sales strategy
4 Conclusion
References
Abbreviation list
EV Electric Vehicle
WOM Word of mouth
1 Introduction
In recent years, there have been many discussions and decisions about what the future of our vehicles and their engines should look like. „In less than 5 years, Norway wants all new passenger cars, light commercial vehicles, and urban buses sold to be zero-emission.“1 But it's not just Norway that set these goals. California already has legislation that says only zero-emission vehicles will be allowed for sale by 2035.2 Furthermore, there are other approaches to how regions and communes convince people to buy electric cars. In Dubai, electric cars are still exempt from public parking fees until July 2022. The exemption even works automatically, so owners don't have to do anything to get the free parking.3 The auto industry itself also needs to change in the direction towards zero-emission vehicles due to ongoing regulations from governments and local policies. Within the German auto industry, Audi is one of the most pressing. They want all new Audi models to be purely electric from 2026 onwards, with production of internal combustion engines to cease in 2033.4 Sweden‘s popular car manufacturer Volvo is even more ambitious. Volvo Cars aims to become a leader in the fast-growing premium electric car market and plans to become an all-electric car company by 2030. By then, the company plans to sell only fully electric cars and eliminate all internal combustion engine vehicles, including hybrids, from its global portfolio.5
In addition to the development of existing brands, there is an increasing number of new brands entering the market with all-electric fleets. The most famous example is Tesla, but there is also a new player that has been gaining momentum in recent years - Polestar. The best-known company in the EV market is Tesla, but there are other important players in the market and one of the most outstanding ones of them is Polestar.
Polestar's existence began in 1996 as a racing team that was part of Volvo's racing division. After the release of the first Polestar models under the Volvo brand to improve the performance of some Volvo models in 2013/14, there were a lot of developments.6 „In 2017, Volvo purchased outright the tuning and performance arm of Polestar and decided to spin off the brand as a separate manufacturer to produce high performance electric vehicles.“7 That means Polestar now operates more as a sister company to Volvo, owned 50/50 by Volvo and Chinese car company Geely, that has its roots in China, where production is also based.8 Polestar's first model as a standalone brand was the Polestar 1, launched in 2019 as a plug-in hybrid. A year later, the Polestar 2, which is Polestar's first all-electric vehicle, was introduced.9 When we were in Norway with a group a month ago, Polestar caught ourattentionwithapop-upstandwhich we kept as a positive memory.
In the following case study, the highlights of the Polestar's history will be shown. Furthermore, their current constellation, the key facts and development of the financial figures will be presented. In addition, Polestar's brand architecture is analyzed, and its competitors are described. In the main part, we will analyze Polestar's situation and their revolutionary brand strategy to be aware of how Polestar deals with brand management, IMC tools and the company scale up management. Polestar's brand management will be analyzed by using different models and concepts. Moreover, we have visualized the most important key facts to illustrate important coherences using the language of graphics.
2 Background Information
2.1 History
Polestar knows its origin as a racing team under the banner of Flash Engineering, which worked on its own cars to help Volvo's racing division win the Swedish Touring Car Championship (STCC) in 1996. After being sold in 2005 to Christian Dahl in 2005 it was renamed to Polestar Racing but kept the constant connection to Volvo. Yet, the company remained separate from Volvo made up of two distinct divisions, namely the racing department and the performance road car division.10 11 12 13 14 Change was set when Geely bought Volvo in 2010 and acquired Polestar in 2015 after the release of the first public production model. After its successful trials in the public market, Volvo acquired the performance division of Polestar in 2015. The racing division which Polestar was originally created for continued separately under the name Cyan Racing.[1112]
In 2017, Volvo announced Polestar to be a producer of high performance electric and hybrid vehicles as a solo brand. Focused on design and technology, the brand is set to compete with other high-performance electric vehicles like Tesla.[1314]
Quickly after its announcement the hybrid Polestar 1 was released, followed by the fully electric Polestar 2 in 2021. Polestar updated its symbol and replaced the colour as its strongest element by ‘the polestar' as can be seen in figure 1 and 2. It is strongly simplified to a minim alistic symbol, yet with a strong presence.15
2.2 Key Facts
Abbildung in dieser Leseprobe nicht enthalten
Figure 1: Polestar revenue in SEK16
As shown in the chart, Polestar's two companies, Polestar Automotive (Shanghai) Co.,Ltd and Polestar Automotive Holding Ltd, generated total sales of SEK 5,540 billion in 2020. Compared to Polestar's sales of only SEK 0.721 billion in 2019, there is an increase of nearly 800% and that shows the direction in which Polestar is heading.17 „Polestar delivered around 10,000 vehicles in 2020 and expects to scale up its annual sales volume to approximately 290,000 units by 2025.“18
2.3 Vision and Mission
Polestar's vision focusses on three main points: sustainability, inventive technology and special design.19 „Polestar has a vision: that sustainable materials can create new design opportunities while redefining premium, that technology can further close the gap between driver and car, and that design languages can (and should) always evolve.“20
On the other hand, Polestar's mission, is primarily to challenge the past and be revolutionary, inventive and detail oriented.21 They also want to stand out from the competition with the following statement: „The maturity of the automotive industry has become a barrier to innovation . Over time, cars have started to all look the same, feel the same, be the same. We constantly question industry ideas and thinking, challenging ourselves to be better, never accepting mediocrity.“22
2.4 Brand Architecture
„Brand architecture is an organizing structure of the brand portfolio that specifies brand roles and the nature of relationships between brands.“23
Abbildung in dieser Leseprobe nicht enthalten
Figure 2: Geely Holding group company structure24
In the case of Polestar, the company is part of a joint venture between the Swedish
Volvo Car Corporation and Zhejiang Geely Holding since 2017.25 Nevertheless, Volvo Car Corporation was bought by Geely, which makes Geely the owner of both companies. Geely is responsible for the financing part and Volvo Car Corporation is responsible for its know-how and the well-developed service network.
Due to the major change in the automotive industry related to the growing importance of EVs, car manufacturers have to reposition themselves. For this reason, Volvo Car Corporation held a board meeting on Polestar in early 2017 to discuss the risks and opportunities of positioning the Polestar brand in various brand positions within Volvo's brand portfolio.26
„Brand alignment, implementation costs, media awareness, possibilities to capture market share, and target group, among other factors, were discussed and evaluated, pointing the solutions towards different directions“27
After evaluating those variables, the executive team decided to launch Polestar under a separate brand with its own identity. The advantages of having a separate company, for example being able to address a different target group, were seen as more significant.28
As Polestar is a subsidiary company of Volvo and they are a stand-alone brand from Volvo, it belongs to the brand architecture category “house of brands”. In the tradeoff of brand architecture, Polestar is positioned between focus and flexibility, as Polestar operates independently of Volvo. On the other hand, it uses Volvo's manufacturing capabilities and the service network.29
Therefore, Polestar relies on the resources that Volvo provides and is not completely independent from them.30
Abbildung in dieser Leseprobe nicht enthalten
Figure 3: The brand relationship spectrum. 31
2.5 Competitive analysis
2.5.1 Tesla
Tesla, the biggest EV company that was named after the pioneer in electricity research, Nikola Tesla is a major player in the e-mobility market and was founded in 2003 by Martin Eberhard and Marc Tarpenning. According to Statista, the revenue of Tesla in 2020 was 31.536 billion USD with several Tesla vehicles delivered worldwide 2020 at 499 000 units and global market share in the respective plug-in EV market in the first half of 2021 at 14.5%.32 Nowadays, Tesla offers four different car models: Model X, Model S (being an alternative to Polestar 1), Model 3 (creating the direct competition to Polestar 2), and Model Y.33 The price range of model S varies from 80 000 USD to 170 000 USD being at the same price range as its competitor from Polestar, model 1. The Model 3 has its base price at 40 000 USD and fully loaded can cost up to 70 000 USD, making it a bit cheaper option in comparison with the Polestar 2, which costs fully loaded around 100 000 USD. Tesla identifies itself as a company that wants to “accelerate the world's transition to sustainable energy”. The brand awareness of Tesla is created by its elegant lettermark logo (where the logo symbolizes durability and safe driving), futuristic design (that is supposed to represent innovation, elegance, and power), and name representing breakthrough invention. Tesla has an unordinary attitude towards advertising because they don't spend nearly any financial resources on promotional campaigns and their IMC strategy is then focused mostly on WOM, social media, and other free possibilities that enable them to increase their brand awareness.34 35
2.5.2 Lucid
Lucid, the pure EV company that was founded already in 2007 under the name Atieva is one of the newcomers in the EV market. The CEO of the company Peter Rawlinson (former vice-president of Tesla) projected Lucid to be the new Tesla among EV companies. According to Forbes, the revenue of Lucid in the first half of 2021 was 0 USD. At the time of writing this case study, the number of cars sold is anywhere between 0 to 1 000 (the company started selling their first cars in the US at the time of writing this case study in the middle of October 2021). The goal of Lucid for 2022 is to produce 20 000 cars and increase their production in the upcoming years.36 Nowadays Lucid offers only one car model named Air in three different variations (Air Pure, Air Touring, and Air Grand Touring), being the direct competition to Polestar 2. The price range of the model goes from 78 000 USD up to 150 000 USD being slightly more expensive than Polestar 2 that varies from 40 000 USD to 100 000 USD. Lucid identifies itself as a company “Building an Automotive Brand for a Post-Luxury World”. The brand awareness of Lucid is created by its elongated abstract logo, modern design (the design of the brand comes from California origins and combines the optimism and pioneering spirit), and unique name in connection with its brand positioning as a pioneer in the market symbolizing reinvention, unique experience, and elegance. The company is using different IMC tools to increase its brand awareness, including digital marketing, social media, and fairs presence.37 38
3 Polestar's scale-up and its revolutionary brand strategy
Polestar as a start-up in the EV industry is facing immense scale-up. In these first years, the company grew substantially and received positive feedback from several market experts and media. Moreover, Polestar applied its own unconventional marketing and sales strategies to gain a position in the market and consumers' minds. Since the company had a successful start-up strategy, it is interesting to analyze what image the company created in the start-up phase and how they created this. Polestar describes its own strategy as “unconventional” and “free to find our way”, but what is it that makes this brand successful? In this case study, the strategy will be described from the perspective of the brand and communication in order to provide the reader with knowledge and enable him to adopt certain parts.
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