Volvo to drop its stake in Polestar with Geely taking over funding

Shortly after launching its latest model, the Polestar 4, the EV manufacturer faces trouble. The former performance arm of Volvo, and now a separate company, still relies on funding, which until now was flowing from Volvo. As the EV sales seem to slow down for some manufacturers, Volvo is looking to cut down its expenses and wants to shed its Polestar’s shares.

Polestar claims it made huge progress - for an essentially new company - it already has 3 vehicles on sale across a bunch of global markets. According to its CEO, the company is on its way to being profitable in 2025. While that’s great news, it needs another $1.3 billion to get there. And that’s when it gets interesting.

Polestar is owned by Geely and Volvo, the latter holding 48% of shares. With Volvo struggling to rein in rising costs, the company already let go of 1,300 employees, but it wants to fully focus on EVs and that means it needs more money. The plan is simple - offload some of its 48% stake in Polestar and let the young offshoot be even more independent.

Unsurprisingly, Geely is stepping in with its billionaire owner Li Shufu has already confirmed it will pick up the tab. Geely owns 79% of Volvo and the remainder of Polestar, which makes even a big move like this, similar to taking money out of one pocket and putting it back into the other.

The market has responded with Volvo’s shares jumping 30% after the announcement. This is good news both for Volvo and Polestar with the latter being given a chance to spread its wings a bit more. Polestar’s shares have been falling ever since the company went public, they started at $9.76 in May 2021 and now are sitting at a lowly $1.93 (at the time of writing).

The EV market is alive and well, contrary to what some would like us to believe. Yes, the legacy automakers seem to struggle to shift their EVs - Renault just pulled the plug on the Ampere IPO and VW did the same with the PowerCo IPO. GM is going back to making more plug-in hybrids and Toyota says EVs won’t matter much. All that while Europe trembles in the face of Chinese imports, the Chinese EV market growing faster than the rest of the world put together, and the Tesla Model Y becoming the best-selling car globally.

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