Polestar’s “Hybrid” Retail Model Might Be the Best of Old and New

One of the societal benefits of a new automotive brand is how it may choose to “disrupt” the traditional business model. Forget the headlines you read about startups: Bypassing the longstanding tradition of dealership retailers is certainly a mixed bag in the long term. Not every automaker can (or should) be a Tesla, nor should it stick to the generally awful method of retailing on which Detroit’s Big Three has relied for over a century.

The third solution is hybrid retailing, and one EV automaker is hoping its implementation will be the best of both worlds. At least, that’s what I saw after attending the unveiling of the latest “space” by Polestar, the famous Swedish name that started in motorsport, transitioned to making higher performance Volvos, and now sells only electric vehicles. Don’t call a Polestar location a traditional car dealership, even if that’s what it is … kind of.

Indeed, this space has grace and a stunning, minimalistic visual pace. It’s located in Houston’s ritzy Uptown shopping district, at a more upscale strip center than the Tesla storefront in the nearby shopping mall. The lighting is perfect, the decorations minimal, allowing the cars to stand out like an Isamu Noguchi exhibit in an art museum. I walked into the back office area and two lounge-worthy conference rooms caught my eye. One of them housed a gentleman named Gregor Hembrough, the North American CEO of Polestar, whom I was to interview.

I had arrived with a notebook laden with questions for Hembrough but temporarily set it aside. Faced with a writer from Hagerty, Hembrough immediately opened up about his passion for classic cars and motorcycles, and we talked shop for longer than I anticipated. Hembrough was born into a family of automotive enthusiasts. His father was an RAF pilot and engineer who took his son to kindergarten in a Jaguar XK140—and not just when the weather was nice. The Jaguar was the vehicle of choice even during the harsh winters of northern New Jersey.

The XK140, along with a Corgi diecast model of the Jaguar E-Type, made an impact on Polestar’s future North American CEO, and a real-life, right-hand-drive 1966 E-Type has remained with him throughout his career with Volvo and Polestar. The Jag was eventually joined by an air-cooled Porsche 911, and a Land Rover Defender, plus a Honda Trail and Superhawk and a Vespa, allowing Hembrough to proudly assert that his collection includes “three cars and three motorcycles.”

Gregor Hembrough: Polestar North America’s first and only CEO

Hembrough’s passion for automobiles is ever-present in his career in automotive retailing. At age 13 he was sweeping floors at a motorcycle dealership. Just two years later, he was assembling crate bikes. College took him into sales and from there to one of the first Acura dealerships, a path which turned into a “28-year love affair with Volvo.” Hembrough has been the first and only head of Polestar North America since the brand’s inception in 2018, and he was in the room even earlier, when it was nothing more than a Powerpoint presentation.

Like a parent at a child’s recital, Hembrough is beyond proud of where the brand started and where it is going. He is “always excited to wake up in the morning and get to work.” His hands have touched all Polestar models, from the stylish hybrid coupe (Polestar 1) to direct competitors to Tesla sedans (Polestar 2) and SUVs (Polestar 3). I was given a tour of the Polestar 3, and its thoughtful styling and outstanding quality prove that Polestar isn’t adopting Tesla’s downmarket aspirations. The example I sampled had an interior worthy of an “Inscription”-grade Volvo S90, a luxury car that has a cabin on par with that of any other luxury brand.

Turns out Polestar is only going up from there. The upcoming Polestar 4 has the Porsche Macan set in its sights, while the future Polestar 5 will be a direct competitor to the Taycan. Speaking of the famous brand from Stuttgart, which is also known for its sporting convertibles, the Polestar 6 will be a roadster with 880 horsepower. Taking on both Porsche and Tesla is a gargantuan task, but Polestar is guided by a vision from Hembrough and a plan backed by multiple players: Polestar’s R&D in the UK, Volvo’s global sales and distribution network, and resources from parent company Geely (which makes several EVs in China).

“Entrepreneurs that are on your side are an asset.”

Hembrough doesn’t shy away from the fact that he is relying on franchising with dealer principals to roll out the Polestar brand. Ramping up operations during a global pandemic was challenging enough, so the franchise model ensures Polestar has a built-in support system. And it already supports a customer base, one to which Polestar can easily market its future offerings. As Hembrough bluntly puts it, these entrepreneurs are an asset because they “get the customer journey.”

In a recent LinkedIn post, Hembrough thanked the “West Houston Auto Group for their hard work in building this new home for Polestar.” This group also owns a local Volvo dealership, so it is connected to Volvo’s network for retail and customer support. Leveraging what you already have is a good plan, because Polestar “spaces” are light on inventory. The customer test drives a model at the Polestar space but orders their vehicle online. Going forward, they will benefit from home pickup and delivery, too. Service is handled offsite, and Polestar’s parts cache lives in Volvo warehouses.

Hembrough says this arrangement is less like Tesla and more like Ferrari, and that distinction is becoming even clearer as premium-priced Tesla products are no longer getting the customer satisfaction ratings of the company’s early days. Hembrough is thankful that Tesla exists, because his plan is like GM’s stair-step branding system in the 1950s: If Tesla is the Chevrolet of EVs, Polestar is the Buick or Cadillac. Hembrough and I had a fun chat about the lessons learned from Lexus (dealers are business partners) and even Saturn (rabid customer loyalty to the dealers), but I am wise to the fact that tales about automotive retailing only go so far on an enthusiast website—and I’ve probably overextended your generosity by now!

My time with Polestar’s North American CEO made it clear the company aims to be a niche player in the luxury car market. As EVs increase in popularity in specific zip codes, that play is a smart one. Like any good CEO, Hembrough is looking long-term, and he has the resources of an established brand behind him. When it comes to retail strategy, throwing the baby out with the bath water is out of the question, so combining the best of traditional luxury-car and modern “start-up” automotive approaches might be ideal.

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