Volvo announced plans to sell 62.7% of its stake in EV maker Polestar (PSNY) as it looks toward the next stage of its transformation. Volvo said it will also cut off funding as the “company is well positioned for growth.”
Volvo plans to trim stake in EV maker Polestar
“As we embark on the next stage of our transformation, gearing up to lead in next-gen mobility, our focus sharpens on Volvo Cars’ development,” Volvo Cars CEO Jim Rowan explained.
Volvo Cars board proposed plans to distribute the 62.7% stake Friday. If approved, the move will result in an 18% stake in Polestar. Parent company Geely, with a 78.7% stake, has already confirmed it intends to vote in favor of the stock sale.
Despite selling the majority of its shares, Volvo said it will continue to have influence over Polestar. ‘
The automakers will continue to collaborate across R&D, manufacturing, and sales. Volvo and Polestar still have a $1 billion outstanding convertible loan.
Geely will continue to fund the EV maker while providing operational support. Rowan confirmed, “Volvo Cars will not provide further funding to Polestar.” The plans were revealed earlier this month.
“With Polestar’s strengthened business plan, the launch of Polestar 3 and Polestar 4, and Geely’s commitment and support, the company is well positioned for growth,” Rowan added.
A big year ahead
Geely’s CEO, Daniel Donghui Li, said the company has “strong confidence in Polestar” and is “committed to supporting their announced business plan and financial targets.” As Li explained, the move enables Volvo to invest in its transition to an all-EV automaker by 2030.
Meanwhile, after a challenging year that ended with job cuts last month, Polestar looks to turn things around in 2024 with new models launching in key segments.
The Polestar 4 went on sale in Europe and Australia late last month with up to 379 miles range. Polestar’s electric SUV coupe starts at EUR 63,200 ($68,500) in Europe and AUD 81,500 ($53,700) in Australia. The first models are expected to reach customers by August.
Meanwhile, the Polestar 3 starts at $83,900 with up to 300 miles range in the US. Powered by the same platform underpinning the Volvo EX90, the electric SUV is offered in two versions: long-range and long-range performance.
Both include a dual-motor powertrain. Polestar’s Performance model costs $89,900 with 517 hp and 671 lb-ft of torque.
Polestar stock is down over 8% following the news. The move mirrors a broader downtown in EV stocks, with Rivian (RIVN) and Lucid (LCID) reporting lower expected deliveries this year. Polestar shares are now sitting at their lowest value since going public at $1.30 per share. That’s down 75% over the past year and 91% from their ATH in Nov 2021.
Volvo also has an exciting lineup launching this year in popular segments. The Volvo EX30, starting at $35,000, will be among the cheapest EVs in the US. Volvo is also launching the EX90, its first three-row electric SUV, and the EM90, its first electric minivan.
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