Seoul, South Korea – Shares of Volvo Cars surged over 20% on Thursday after the Swedish automaker announced its decision to cease funding subsidiary Polestar Automotive. The decision comes as Volvo reported a 10% year-on-year increase in fourth-quarter net sales, bringing its full-year 2023 total to 552.8 billion krona. Adjusted operating income also saw a significant jump, rising to 18.38 million krona from 12.17 million for the same period in 2022.
Volvo Cars indicated that it is considering handing stewardship of luxury car brand Polestar over to majority Volvo shareholder, China’s Geely Holding, which holds a 78.65% stake in the company. The move is part of Volvo’s strategic shift to focus its resources on developing Volvo Cars, potentially leading to a redistribution of shares to Volvo Cars’ shareholders.
CEO Jim Rowan described the move as a “natural evolution” in the relationship between the two carmakers, highlighting the growth trajectory of Polestar as it transitions from being a one-car company to a three-car company and introduces new models in the first half of this year. With Volvo Cars holding around a 44% stake in Polestar, the decision to reduce its shareholding is seen as a strategic move to refocus resources and seek external funding for future technology investments.
In response, Polestar welcomed Geely Sweden Holding as a potential new shareholder, emphasizing its continued partnership with Volvo Cars in areas such as R&D, manufacturing, and after sales. Polestar CEO Thomas Ingenlath expressed optimism about the future, citing the promising phase of development and the potential for even greater synergies with Geely on future-oriented technologies.
The decision to realign resources and strategic priorities reflects the increasing competitiveness and innovation within the automotive industry, as companies seek to capitalize on emerging trends and technologies. It also underscores the evolving dynamics of partnerships and shareholding structures, as companies navigate the complexities of collaboration and resource allocation in a rapidly changing market landscape.