Volvo's EV shift stumbles with unprofitable Polestar, to stop funding
- Swedish auto giant Volvo Car will reduce its share in Polestar from 48 per cent to just 18 per cent.
Volvo Car AB will slash its stake in Polestar Automotive Holding UK Plc to 18% and stop funding the unprofitable electric-vehicle maker to focus on its on shift to battery technology.
Volvo Car plans to transfer around 9.5 billion Swedish kronor ($921 million) worth of Polestar stock to its shareholders, it said Friday. The move will hand more responsibility to China’s Geely, which controls both companies.
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Polestar shares have slumped due to the manufacturer’s slower-than-expected ramp up and overall cooling EV demand.Volvo Car earlier this month said it’s considering reducing its involvement with Polestar to relieve some of the pressure on its balance sheet.
Since listing in the US in 2022, Polestar has repeatedly tapped Li Shufu’s Geely and Volvo Car for funds. But the Sweden-based company has been fighting its own battles, and last year started to cut some 1,300 jobs as part of a push to reduce costs.
Volvo Car declined as much as 6.2%, taking the stock’s slump over the past year to around 28%.
“We expected the shares to trade up today but the move could indicate investors want to avoid getting the Polestar shares or that there might be some disappointment" that Volvo Car will keep an 18% stake, said DNB analyst Mattias Holmberg, adding he still viewed the announcement as positive.
Volvo Car currently holds around 48% in Polestar. The share transfer will have to be approved by Volvo Car shareholders at the company’s annual general meeting next month. Geely owns 79.5% in Volvo Car, while Li Shufu holds a roughly 39% stake in Polestar.
The share transfer would solidify Geely’s automaking influence, which has expanded greatly since it bought Volvo Car from Ford Motor Co. in 2010. Li Shufu’s company is now a major player with stakes in Mercedes-Benz, truckmaker Volvo and Aston Martin. Geely has also sought to establish new brands in Europe, such as premium EV maker Zeekr.
Geely will continue to back Polestar operationally and with funding, while Volvo Car will support on R&D, manufacturing and after-sales, according to a statement Friday.
The transaction will give Polestar “a more defined and diversified ownership structure" and position it as a “strong, more independent brand" in the Geely ecosystem, Polestar Chief Executive Officer Thomas Ingenlath said in emailed comments.
