The transaction implies an enterprise value for Polestar of $20 billion.
Volvo Cars, the largest shareholder in Polestar, announced separately it will make additional equity investments in Polestar of up to $600 million meaning it will hold close to 50% of the combined company.
Volvo Cars added it is still evaluating its own potential IPO this year.
Polestar CEO Thomas Ingenlath said: “This is a really exciting time for Polestar. With two award-winning cars on the road today in 14 active markets across three continents, we seek to expand to 30 markets by 2023.
“We are thrilled about the targeted addition of three new premium electric cars to our line-up by 2024, starting with our first SUV expected in 2022.
“In Alec and the Gores Guggenheim team, we have found a partner with an impressive track record of bringing leading companies to the public markets.
“The proposed business combination and listing position Polestar as a financially strong, future proof, global electric car company. It will enable us to accelerate our growth, strategy and most importantly, our mission towards sustainable mobility.”
Alec Gores, chairman and CEO of The Gores Group and chairman of Gores Guggenheim, said: “Polestar is a stand-out company in the EV space – a design-led, sports-performance oriented electric OEM focused on industry-leading sustainability solutions.
“The company is truly differentiated from others given its premier vehicles, attractive financial profile, strong track record of performance, and the fact that it already has cars on the road across the globe.
“I had the privilege of seeing the line-up of upcoming models, and the cars represent best-in-class innovation and industry-leading design that set the brand apart.
“Driven by an incredible leadership team with Thomas at the helm, Polestar is well-positioned to capitalize on this exciting and dynamic time for car manufacturers.”