Volvo halts Polestar funding, handing responsibility to Geely

Swedish automaker Volvo Cars said on Thursday it will stop funding for Polestar Automotive Holding, handing responsibility for the car brand to China’s Geely Holding.

Volvoholds a 48% stake in Polestar, while Geely owns 79% of Volvo, making it Volvo’s biggest shareholder. Swedish-listed Volvo’s heavy investment in Polestar has been criticised by analysts who see the stake as a drag on its resources.

Volvo said it has considered handing Polestar shares to shareholders, which would make Geely the controlling shareholder of the brand.

Like other new electric vehicle (EV) brands and start-ups, Polestar has struggled to make headway, particularly since Tesla started a price war last year. The automaker said earlier this month that it had missed its already reduced delivery targets for 2023.

Polestar’s shares are down just over 83% since it went public in June 2022 via a merger with a special purpose acquisition company.

Geely said in a separate statement it welcomed Volvo’s decision to focus its resources on its own development.

“Geely Holding will continue to provide full operational and financial support to the independent exclusive Polestar brand,” it added. “This support will not require a reduction of Geely Holding shareholding in Volvo Cars,” it added.

Polestar last week said it plans to cut about 450 jobs globally, or about 15% of its workforce, amid “challenging market conditions”.

Volvo reported a bigger-than-expected rise in fourth-quarter operating earnings, posting operating income excluding joint ventures and associates of 6.7bn kronor (about R12bn), up from 3.9bn kronor a year earlier.

Reuters