SHENZHEN: Zhejiang Geely Holding Group Co is preparing to provide more funding to struggling EV maker Polestar Automotive Holding UK Plc as part of a potential redistribution of shares to relieve pressure on Volvo Car AB.
The proposed deal is set to see Geely, the parent of both carmaking brands, emerge as a significant new shareholder in Polestar, Volvo Car said Thursday. The move follows a slower-than-expected ramp up at Polestar that together with a broadening EV cooldown has dragged shares to a record low.
Polestar was previously a subsidiary of the Swedish manufacturer, which currently holds a 48% stake. Since its US listing in 2022, Polestar has continued tapping its key backers Volvo Car, which plans to remain a shareholder, and Geely for new funds.
Volvo Car has been fighting its own battles and last year started to cut some 1,300 jobs, part of a drive to reduce costs across global operations.
Carmakers are adjusting to slowing up take of electric vehicles that has started to fall behind expectations. Volvo Car is also dealing with software development issues that have delayed the brand’s new electric EX30 and EX90 models.
“We have an ambitious growth journey ahead that’s going to require investments,” Volvo Car CEO Jim Rowan said in an interview. “It allows Polestar to go and get funding from other sources.”
Geely, owned by Chinese billionaire Li Shufu, said it’ll fully support Polestar as an independent brand, which won’t affect its 79% holding in Volvo Cars.
The Swedish manufacturer, which owns a 48% stake in Polestar, will continue cooperate with the EV maker across key business areas, including development and manufacturing, it said Thursday.
The company would need to inject an additional US$1 billion into the premium EV-maker over the next 12 months to keep it afloat, analysts at Bernstein said in a note last week, advocating the nameplate shouldn’t be independently listed.
Volvo Car on Thursday also reported fourth-quarter operating income of 5.39 billion kronor (US$520 million), slightly below an average analyst were forecasting for a 5.92 billion kronor-result.
Its shares have nearly halved over the past year, reducing Volvo Car’s market value to around 82 billion kronor.
