Volvo Car will no longer fund Polestar, the struggling electric car maker, and may distribute its stake in the company to shareholders. Volvo Car aims to separate itself from Polestar and direct its resources towards its own development.


Polestar, founded in 2017 by Volvo Car and China's Zhejiang Geely Holding Group, has been a financial burden for Volvo, which holds a 48% stake in the company. Slow consumer adoption of electric vehicles and intense market competition have caused Polestar to incur losses. In an effort to turn things around, Polestar has relied on approximately $1 billion in financing from Volvo.

Impact on Volvo Car

According to UBS analyst David Lesne, the stake in Polestar is currently valued at approximately SEK7.5 per Volvo share, assuming no discount. This has affected Volvo Car's earnings per share, reducing it by approximately SEK1.9 compared to the reported SEK4.4 in 2023.

Potential Distribution of Stake

Volvo Car is considering distributing its stake in Polestar to its shareholders. If this were to occur, Geely would become a significant new shareholder. In a statement, the Chinese auto group expressed its commitment to providing full operational and financial support to Polestar as an independent exclusive brand, without requiring a reduction of its shareholding in Volvo Car.

CEO's Perspective

Jim Rowan, CEO of Volvo Car, believes that separating from Polestar is a natural evolution for the company and that now is the right time to reduce its shareholding. He also suggested that Polestar should explore alternative funding options.

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