Volvo announced plans to reduce its stake in Polestar by 62% and stop funding the electric vehicle startup as it focuses on financing its own transformation into a fully electric brand.
The shares in Polestar will be distributed to Volvo's shareholders, the largest of which is Zhejiang Geely, owning 79.5% of the company. This move will give Geely greater control over Polestar. Geely's chairman, Li Shufu, is also a major shareholder in Polestar with a 39% stake.
At Polestar's current share price, the shares are valued at around $921 million. After the deal is closed, Volvo will still retain about 18% of Polestar.
In a statement, Volvo CEO Jim Rowan said it was “logical” to maintain some influence in Polestar given the close collaboration between the two companies.
Polestar, originally a Swedish racing team and later Volvo's performance division, became a standalone electric vehicle brand in 2017. It currently shares technologies, production facilities, and other commercial operations with Volvo. Polestar also has a loan owed to Volvo.
Having become a public company in 2022, Polestar will not have to completely fend for itself. Geely will continue to provide funding, while the collaboration between Volvo and Polestar will also persist.
Polestar is expected to see a sharp increase in sales in 2024 with the arrival of the Polestar 3 and Polestar 4 SUVs. Last year, Polestar delivered approximately 54,600 vehicles, primarily the Polestar 2 hatchback, which is a 6% increase over 2022's deliveries.
