Polestar welcomes Geely as a potential new backer as Volvo steps back

  • Polestar anticipates growth with a 2024 product lineup and potential investment from Geely.
  • Volvo considers adjusting Polestar shares while cutting funding, remaining a strategic partner.
  • Challenges persist, and Polestar seeks additional funding from Geely amid promising developments.

Navigating industry challenges, Polestar adapts to shifting alliances for future growth

Polestar is gearing up for a transformative phase with an expanded product portfolio set for 2024. Geely Sweden Holding is poised to become a potential direct shareholder, reflecting a commitment to the manufacturer’s independent growth. 

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Volvo Cars, currently holding about 48% of Polestar’s shares, is due to cease funding he EV manufacturer with Geely Sweden Holding likely to be the primary recipient. 

Despite this shift, Volvo Cars remains a strategic partner in critical areas such as research and development, manufacturing, after-sales, and commercial operations.

Having achieved significant milestones in developing an all-electric model lineup, establishing a global sales and service network, and diversifying its manufacturing footprint, Polestar unveiled a reinforced business plan in November 2023. The plan focuses on managing costs, driving higher margins, and achieving cash flow, leading to a reduced external funding requirement of approximately $1.3 billion until the targeted cash flow break-even in 2025.

Thomas Ingenlath, Polestar CEO, expressed enthusiasm, stating:

“With our growing line-up of exclusive, performance cars, Polestar is in one of the most promising phases of its development. We have successfully ramped up production and started sales in China, Europe and Australia of Polestar 4 and Polestar 3 is expected to start first customer deliveries this summer. We look forward to continued cooperation with Volvo Cars as well as benefiting from even greater synergies with Geely on future-orientated technologies.”

Volvo Cars ceases funding

In doing so, its likely to hand over responsibility for the brand to its majority shareholder, Geely. Geely, parent company of both brands, affirmed its full support for Polestar as an independent brand. This strategic move by Volvo allows it to concentrate resources on its own development, aligning with Geely’s objectives.

The manufacturer has faced challenges, including a slower-than-expected production ramp-up and a broader cooldown in EV demand. This has resulted in record-low shares. Geely is preparing to inject additional funding into Polestar to address financial needs, potentially involving a redistribution of shares.

The financial landscape reveals that if independently listed, the manufacturer might require an additional $1 billion over the next 12 months, as suggested by analysts. Concurrently, Volvo reported a significant rise in fourth-quarter operating earnings. This reflects its ongoing efforts to navigate challenges. These include software development delays for new electric models (EX30 and EX90) and its own cost-cutting measures.

Will the Polestar 4 turn the tide?

The Polestar 4 hit European and Australian markets on the 31st of January 2024. Positioned between the Polestar 2 and 3, it marries coupé aerodynamics with SUV design. This new EV is manufactured at Geely Holdings’ Sustainable Experience Architecture factory in China. It seems likely that this tech-first EV offering will kick Geely’s increased investment off to a good start.

As the narrative unfolds, the automotive industry watches closely to see how these strategic shifts will shape the future of this pioneering electric performance car brand.

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