Stock Market

Electric vehicle (EV) manufacturer Polestar Automotive (NASDAQ:PSNY) is known for catering to luxury car buyers. There are benefits and drawbacks to this approach. PSNY stock will probably move higher over the next couple of years but don’t expect quick gains if you’re planning to invest in Polestar.

As we’ll see, Polestar has ambitions to make a splash in the U.S. Bear in mind, however, that Polestar Automotive won’t be the only high-end EV maker in America. The company will have to compete with ambitious rivals such as Lucid Group (NASDAQ:LCID) and Rivian Automotive (NASDAQ:RIVN).

Still, there’s a good chance that Polestar Automotive will overcome its challenges and earn a foothold in the U.S. EV market. These things take time, though, so be prepared to hold your Polestar shares until 2025 at least.

Pricey Vehicles Could Be a Problem for PSNY Stock

As Dana Blankenhorn reported not long ago, Polestar Automotive has a new SUV model called the Polestar 3. The company expects that the Polestar 3 “will be made in the U.S. starting next year.”

Barron’s gave the Polestar 3 a glowing review, calling it a “head turner.” Polestar Automotive hopes to sell 80,000 of these units in 2023, versus the approximately 50,000 Polestar 2 units the company sold last year.

Polestar Automotive is proud of its efforts to reduce carbon emissions with its new-energy vehicles. The company managed to slash its per-vehicle carbon dioxide emissions by 8% year over year in 2022.

That’s commendable, and I expect that automotive shoppers who are serious about cleaning up the environment will want to buy Polestar Automotive’s EVs. The problem is, Polestar’s vehicles tend to be cost-prohibitive. For example, according to U.S. News & World Report, the Polestar 3 will start at $85,300, and is “likely to be sold loaded, with few options.”

Polestar Goes All-in on Marketing

Blankenhorn and U.S. News & World Report both observed that Polestar Automotive plans to spend a whopping $20 million to market the Polestar 3. Also, Blankenhorn noted that Polestar “had its first U.S. ad at last year’s Super Bowl in February 2022.”

Super Bowl ads aren’t cheap, and $20 million is a lot for Polestar Automotive to spend on an advertising campaign. However, as the old saying goes, “You’ve got to spend money in order to make money.”

I expect Polestar Automotive to kick into high gear with its EV sales after inflation eases in the U.S. That’s when more automotive shoppers will be willing and able to purchase high-powered luxury vehicles.

Additionally, the impact of a marketing campaign isn’t immediate. Polestar Automotive’s investors will need to be patient and prepare for the company’s commercialization efforts to yield financial rewards down the road — i.e., in 2024 and 2025.

So, Here’s My PSNY Stock Price Prediction for 2025

At less than $4 apiece, shares of Polestar Automotive are highly affordable, even if Polestar’s vehicles aren’t. Over the next couple of years, the company’s marketing efforts and ambitious push into the U.S. EV market will likely pay off. Just don’t expect anything spectacular to happen tomorrow or next week.

I expect PSNY stock to be worth $8, twice the current share price, by the end of 2025. Just be aware that there are risks involved, so please don’t over-leverage yourself on shares of Polestar Automotive.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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