Volvo to Cease Funding Polestar, Give Control to Geely

Polestar will no longer receive support from Volvo, which will hand over governance of the EV brand to Geely. The parent company of both Swedish companies, Zhejiang Geely Holding, will now finance Polestar, according to Automotive News Europe.

Geely will also acquire Volvo’s 48% ownership of Polestar as part of the proposed agreement, relieving pressure on the Swedish manufacturer. Industry observers have questioned Volvo’s heavy investment in Polestar, viewing the EV brand as a drain on its resources, with some calling for Polestar to be re-integrated into the Volvo-Geely ecosystem.

Geely declares that it would fully support Polestar’s continued independence as a brand while applauding Volvo’s decision to concentrate its resources on its growth. Analysts estimate that Polestar would require an extra $1 billion in funding over the next 12 months to remain afloat.

Polestar has recently experienced some difficult times. In addition to dealing with heightened rivalry, the brand—which was separated from Volvo and Geely in 2017—finds it difficult to match the price cuts offered by Tesla and BYD.

Despite shipping 54,600 automobiles worldwide last year, Polestar fell short of its 2023 sales goal of 60,000 units. Originally it had set an 80,000 unit goal at the beginning of 2023, which was later scaled back to the 60,000 unit target. The company’s recent revelation that it will be eliminating about 15% of its staff, would have expedited the rescue process.

Source: Reuters