Volvo Cars announced Thursday that it will no longer fund the electric vehicle sports car brand Polestar Automotive, the New York Post reported.
After the company announced it was pulling funding from the subsidiary, Volvo’s stock surged over 30%. Polestar may be turned over to China-based Geely Holding, Volvo’s largest shareholder. CNBC reported that Geely currently holds a 78.65% stake in Polestar.
“Volvo Cars is evaluating a potential adjustment to its shareholding in Polestar, which may result in Geely Sweden Holdings becoming a significant new shareholder,” the Swedish automaker said in a Thursday press release.
The company is focused on “developing and concentrating its resources on its own ambitious journey, including its own in-house electric vehicles.”
“Polestar is entering an exciting phase with a strengthened business plan and positioned for future growth,” Volvo added.
Volvo CEO Jim Rowan told CNBC that the decision to cut funding was a “natural evolution” in the relationship between the automakers.
“Obviously, we spun out Polestar as a separate company a long time ago, and since then we’ve been incubating and working with Polestar for a number of years,” Rowan stated. “Now, Polestar … they have got a very exciting future ahead of them, they’ve moved from being a one-car company to a three-car company, they’ve got two brand-new cars coming out very shortly, in fact in the first half of this year, and that’s going to take them to a new growth trajectory.”
Despite the EV market appearing to cool off, Volvo is still aiming for its entire fleet to be fully electric by 2030. Its EV sales increased 70% in 2023.
In a Thursday press release from Polestar, the struggling start-up welcomed Geely Sweden Holding as its “potential direct new shareholder.”
“Volvo Cars is evaluating a potential adjustment to its shareholding in Polestar including a distribution of shares to its shareholders, with Geely Sweden Holding being the primary recipient. Volvo Cars will remain a strategic partner in areas across R&D, manufacturing, after sales and commercial,” Polestar explained.
Since the EV automaker’s debut, its stock has dropped 80%. Earlier this month, Polestar announced that it plans to reduce its workforce by approximately 15%, citing “challenging market conditions.”
The automaker’s CEO, Thomas Ingenlath, said, “With our growing lineup of exclusive, performance cars, Polestar is in one of the most promising phases of its development. We have successfully ramped up production and started sales in China, Europe, and Australia of Polestar 4, and Polestar 3 is expected to start first customer deliveries this summer. We look forward to continued cooperation with Volvo Cars as well as benefiting from even greater synergies with Geely on future orientated technologies.”
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