Volvo Stops Financing for EV Maker Polestar
Swedish automaker Volvo said Thursday it would stop funding its high-end electric vehicle unit Polestar, and may hand over shares to give Volvo's Chinese owner Geely a "significant" stake.
Volvo owns 48.3 percent of Polestar, which has launched a cost-cutting plan aimed at improving profitability in the United States and refocusing on a few key markets.
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"Polestar is entering the next exciting phase of its journey with a strengthened business plan and cost actions," Volvo said in a statement.
It added that as it was moving into the next phase of its transformation, "our focus is on developing Volvo Cars and concentrating our resources on our own ambitious journey".
Volvo said it was "evaluating a potential adjustment" of its stake "including a distribution of shares" in Polestar to its own shareholders. As a result, Geely, which owns over 80 percent of Volvo , could become "a significant new shareholder."
"Geely will continue to provide full operational and financial support to Polestar going forward, and as a result Volvo Cars will no longer provide further funding to Polestar," Volvo said.
Shares in Volvo rose over 20 percent following the announcement in the early hours of trading on the Stockholm exchange. At the same time, the company reported a 17 percent drop in net profit in 2023 to 14.1 billion kronor ($1.81 billion). Revenue for the year rose by 21 percent to 399.3 billion kronor ($51.44 billion).
The number of vehicles sold rose by 15 percent to 708,716 units, including 113,419 electric vehicles.
"We delivered a record-breaking year on many levels," CEO Jim Rowan said in the earnings report.