Volvo Cars to stop funding Polestar

Volvo Cars has announced that it will stop funding its Polestar subsidiary, claiming that the amount of cash required to sustain the standalone Sino-Swedish EV brand was no longer viable.

Volvo Cars currently owns 48 per cent of Polestar, which has proven to be a drain on the Swedish car-maker’s limited resources.

As a result, the controlling interest is now expected to shift to Volvo’s parent Geely, which through its own Swedish subsidiaries should provide ongoing funding that keeps Polestar’s future model program on track, including the new Polestar 3 and 4 models.

Volvo Cars chief executive Jim Rowan said the company’s focus must be on “concentrating our resources on our own ambitious journey”.

“As we move into the next phase of our transformation, including deploying large-scale investments in the creation and adoption of new technologies and future-fit production facilities, our focus is on developing Volvo Cars and concentrating our resources on our own ambitious journey,” the company said in a statement.

“We are therefore evaluating a potential adjustment to Volvo Cars’ shareholding in Polestar, including a distribution of shares to Volvo Cars shareholders. This may result in Geely Sweden Holdings becoming 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.

“We will, however, extend the repayment period for the existing convertible loan by 18 months to the end of 2028. This will be subject to relevant approvals and further information will be provided in due course.”

Volvo said that there would continue to be “strong operational collaboration across R&D, manufacturing, aftersales and commercial” operations with Polestar.

But its focus is now on Volvo’s own product rollout.

“Volvo Cars is now entering a decisive phase in its transformation journey. Not only will it continue to roll out and ramp up production of the EX30, EX90 and EM90 in 2024, but the company is also significantly ramping up other investments that will help it become a leader in next-generation mobility,” the company said.

In response, Polestar said it welcomed Geely Sweden Holding as a potential direct new shareholder.

“With our growing line-up of exclusive performance cars, Polestar is in one of the most promising phases of its development,” said Polestar CEO Thomas Ingenlath.

“We have successfully ramped up production and started sales in China, Europe and Australia of Polestar 4 and Polestar 3 is expected to start first customer deliveries this summer.

“We look forward to continued co-operation with Volvo Cars as well as benefiting from even greater synergies with Geely on future-orientated technologies.”

For everything you auto know about EVs, listen to carsales' Watts Under the Bonnet: the electric car podcast

Join the conversation at 

our Facebook page

Or email us at 

editor@carsales.com.au