Volvo and Polestar Part Ways

It is not easy for Volvo to focus on developing its new range while taking care of its Swedish smaller cousin.

Volvo has confirmed its desire to completely divest from Polestar and to stop financing the manufacturer as soon as possible. An obvious solution for this is to hand over the turbulent baby to Geely, since the Chinese company is none other than the main shareholder of both Swedish brands.

Volvo owns around 48% of Polestar’s shares, but this stake significantly impacts its financial capacity and results, according to some analysts. Recall that originally Polestar was Volvo’s performance division before becoming an independent manufacturer.

Polestar struggles to be an effective investment for its shareholders and has difficulty establishing a sustainable position against the largest electric vehicle manufacturers. Like all electric vehicle companies, there is a painful growth period that can prove extremely difficult… and generally ends in bankruptcy! Even if the brand nearly reached its 2023 targets, it remained 6% below its sales forecast. A small gap on paper, but millions of euros lost in the profit and loss account and the need to lay off part of its staff.

Another option would be to open up capital to private shareholders while maintaining Geely’s majority stake. To avoid a panic, the Chinese giant has assured it will continue to provide Polestar with full operational and financial support. Thank goodness, the baby isn’t lost with the bathwater, and all Polestar has left to do is sell enough cars to prove Volvo wrong and close the deal. As if the new Polestar 4 introduced this week didn’t already have enough pressure on its wings.