Geely picks up Polestar funding as Volvo drops it

Volvo Cars has reached a decision to stop financing its all-electric premium vehicle sub-brand, Polestar. The company will be selling its 48% stake in Polestar to its parent corporation, Geely. According to Automotive News Europe, the decision was welcomed by investors: the Volvo stock has surged by more than 30% over the past weekend.

Polestar was originally the Swedish automaker’s in-house customization and tuning shop. In 2017, it evolved into an electric vehicle brand headed by its former Design Director Thomas Ingenlath. Looking back at the decision to single out Polestar into a separate brand, Volvo says it was a mistake. The company did reasonably well during an IPO in the summer of 2022, but has since lost 87% of its stock value. Attracting additional finances to revitalize it has also proven less than viable.

In 2023, Polestar has failed to reach its sales targets with just 54,000 vehicles shipped instead of the planned minimum of 60,000. The company now needs another $1.3 billion simply to stay afloat. By receiving the funding from Geely, it hopes to become profitable again by 2025.

Market experts tend to agree that Polestar has been a thorn in Volvo’s side for quite a while now. Handing it over to Geely seems like the most logical way to optimize investments and technology exchange processes within the corporation. As for Volvo Cars’ existing liabilities before Polestar, they will continue to be valid through 2028.