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According to people familiar with the matter, Polestar is close to a deal to go public through a merger with a special-purpose acquisition company that would value the Swedish electric vehicle maker at $21 billion.

Polestar, owned by Chinese carmaker Zhejiang Geely Holding Group Co., is in advanced talks with gores guggenheim Inc. GGPI 0.30% And an agreement could be reached by Monday, the people said, assuming the talks don’t break down.

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Polestar focuses on high-performance electric cars, establishing itself as a rival Tesla Inc. TSLA 2.75% And Lucid Group Inc. LCD 0.04% Zhejiang Jelly is controlled by its billionaire chairman and founder, Li Shufu. owns it Geely Automobile Holdings Ltd. Jelly -2.25% , Volvo Car Group, and many other electric-vehicle brands.

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As part of the deal, Polestar, whose existing investors include actor Leonardo DiCaprio, will receive an additional $250 million investment, some said.

This will be one of the biggest recent SPAC deals since this year’s burst of activity and somewhat less so in the past. Blank-check firms raise money in initial public offerings with no business and then seek to tie up with one. Once they do, they often raise additional funds in so-called PIPE deals, which are private investments in public equity.

Gores Guggenheim, sponsored by private-equity firm The Gores Group LLC and investment bank and asset manager Guggenheim Partners, raised nearly $800 million in its March IPO. Bloomberg reported in July that it was in talks with Pollstar.

Polestar has faced setbacks as it aims to capitalize on its thirst for electric-vehicle innovation, including last year’s recall of all of its global vehicles over faulty components. The main production model of the Polestar, the Polestar 2, marketed as a competitor to Tesla’s Model 3, got off to a slow start in China. It sold more than 10,000 cars in markets around the world last year and expects a massive increase to that figure by 2025, with plans to launch new models in 2024, some people familiar with the matter said.

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In June, the company said its third model, an SUV called the Polestar 3, would be assembled at a Volvo plant in South Carolina. Other models of the company are made in China.

Some other high-profile electric-vehicle companies have Goes public through SPAC deals, with varying degrees of success.

In July, Lucid concluded a merger with SPAC, run by deal maker Michael Klein. The transaction gave the Saudi-backed auto maker $4.4 billion at a valuation of $24 billion.

some smaller competitors like nikolas corporation, Lordstown Motors Corporation, and canu Inc. has struggled with executive trading, missed production targets and scrutiny from regulators since going public.

Ben Foldi contributed to this article.

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