STOCKHOLM, July 3 (Reuters) - Polestar said on

Thursday it would make its Polestar 7 SUV model at a Volvo Cars

factory in Slovakia, as the EV maker shifts more

production from China and tries to cut its exposure to heavy

European and U.S. tariffs.

Polestar said the two Swedish companies, both controlled by

China's Geely and its owner Li Shufu, had signed a

memorandum of understanding and the new model would launch in

2028.

"Polestar is taking the next step in diversifying its

contract manufacturing footprint by expanding it to Europe," the

company said.

Volvo's Kosice factory in Slovakia is scheduled to start

production in 2026, with an expected annual capacity of 250,000

cars.

Polestar, which has yet to make a profit, faces tariffs of

28.8% for the cars it brings into Europe and more than 100% for

any it imports into the United States.

The European Union imposed tariffs on Chinese-made EVs last

year because of what it describes as unfair subsidies from the

Chinese government. Beijing refutes this criticism.

Tariffs have impacted Polestar more than most European

automakers because the majority of its cars are produced in

China, either by Volvo Cars or Geely.

The automaker now produces some Polestar 3 SUVs in the

United States at a Volvo Cars plant in South Carolina.

Earlier this year, the company stopped taking new orders

from U.S. customers for the Polestar 2, which is still made in

China.

The automaker will also export the Polestar 4 to the United

States from a South Korean plant, where production is set to

begin in the second half of the year.

Earlier this year, Polestar said it would take longer to

become profitable and delayed its expansion of sales to

additional countries.