Volvo to cut stake in Polestar to 18% as EV demand slumps

Volvo Car will slash its stake in Polestar to 18 percent and stop funding the unprofitable electric-vehicle maker to focus on its on shift to battery technology.

Volvo Car plans to transfer around 9.5 billion Swedish kronor ($921 million) worth of Polestar stock, or about 62 percent of its stake, to its shareholders, it said Friday. The move, announced earlier this month, will hand more responsibility to China’s Zhejiang Geely Holding Group, which controls both companies.

Volvo currently holds around 48 percent in Polestar. The share transfer will have to be approved by Volvo shareholders at the company’s annual general meeting next month. Geely owns 79.5 percent of Volvo, while Geely Chairman Li Shufu holds a roughly 39 percent stake in Polestar.

Polestar shares have slumped due to the manufacturer’s slower-than-expected ramp up and overall cooling EV demand. Volvo earlier this month said it was considering reducing its involvement with Polestar to relieve some of the pressure on its balance sheet.

Since listing in the U.S. in 2022, Polestar has repeatedly tapped Geely and Volvo for funds. But the Sweden-based company has been fighting its own battles, and last year started to cut some 1,300 jobs as part of a push to reduce costs.
Volvo shares declined as much as 6.2 percent, taking the stock’s slump over the past year to around 28 percent.

“We expected the shares to trade up today but the move could indicate investors want to avoid getting the Polestar shares or that there might be some disappointment” that Volvo Car will keep an 18 percent stake, said DNB analyst Mattias Holmberg, adding he still viewed the announcement as positive.

The share transfer would solidify Geely’s automaking influence, which has expanded greatly since it bought Volvo from Ford in 2010. It is now a major player with stakes in Mercedes-Benz, truckmaker Volvo and Aston Martin. Geely has also sought to establish new brands in Europe, such as premium EV maker Zeekr, and has partnerships with Renault Group.

Geely will continue to back Polestar operationally and with funding, while Volvo will support on R&D, manufacturing and after-sales, according to a statement Friday.

The transaction will give Polestar “a more defined and diversified ownership structure” and position it as a “strong, more independent brand” in the Geely ecosystem, Polestar Chief Executive Officer Thomas Ingenlath said in emailed comments.