- The group revealed its consideration to transfer control of the struggling luxury car brand Polestar to the majority shareholder of Volvo, Geely Holding.
- Volvo Cars CEO Jim Rowan stated to CNBC's Silvia Amaro that this represents a "logical progression" in the collaboration between the two automakers.
Volvo Shares Surge Over 24% as Funding for Polestar Automotive Ends
Volvo shares saw a surge of over 24% on Thursday after the Swedish automaker announced its decision to cease funding its subsidiary, Polestar Automotive.
Earlier on the same day, Volvo reported a 10% year-on-year increase in fourth-quarter net sales, reaching 148.1 billion Swedish krona ($14.16 billion), contributing to a full-year 2023 total of 552.8 billion krona. The adjusted operating income also rose to 18.38 million krona from 12.17 million for the corresponding period in 2022.
Regarding Polestar, Volvo mentioned in its full-year report that the luxury car brand is "entering the next exciting phase of its journey with a strengthened business plan and cost actions." However, the focus of the parent company remains on developing Volvo Cars, concentrating resources accordingly.
The group also disclosed a consideration to transfer stewardship of Polestar to Geely Holding, the majority Volvo shareholder. Volvo is assessing a potential adjustment to Volvo shareholding in Polestar, including a potential distribution of Volvo shares to Cars shareholders, which could lead to Geely Sweden Holdings becoming a significant new shareholder.
Volvo CEO Rowan: Shifting Focus as Polestar Evolves
Volvo Cars CEO Jim Rowan explained to CNBC's Silvia Amaro on Thursday that the shift in Polestar's stewardship represents a "natural evolution" in the relationship between the two automakers.
"We separated Polestar as its entity a while back, and since then, we've been nurturing and collaborating with Polestar for several years," Rowan stated. He emphasized Polestar's promising future, evolving from a one-car company to a three-car company with two new vehicle launches expected in the first half of this year, propelling them into a new phase of growth.
While Volvo Cars currently holds about a 44% stake in Polestar, acquired in 2015, the luxury electric vehicle brand has faced challenges since going public in June 2022. Analysts have expressed concerns about its impact on Volvo's resources.
Rowan believes now is the opportune moment for Volvo Cars to reduce its Polestar shareholding, enabling the company to seek external funding independently.
This move allows both Volvo and Polestar to concentrate fully on their respective growth trajectories and essential technology investments in the coming years.
Read more such news on techinsighttoday
Thank you so much for reading.