By Dominic Chopping
STOCKHOLM–Volvo Car will stop funding Polestar and could distribute its stake in the company to shareholders, as it moves to separate itself from the struggling electric-car maker and focus resources on its own development.
At 1158 GMT shares traded 22% higher at SEK33.24.
Polestar was founded in 2017 by Volvo Car and China’s Zhejiang Geely Holding Group, its majority shareholder.
Analysts have highlighted how Volvo’s 48% stake in Polestar has been a drag on its resources, with the company struggling with losses amid slow consumer uptake of electic vehicles and an increasingly competitive market, tapping Volvo for around $1 billion in financing while the company works through a turnaround plan.
“The Polestar stake is worth circa SEK7.5/Volvo share at market value assuming no discount and impaired Volvo EPS by circa SEK1.9 versus SEK4.4 reported [in 2023],” UBS analyst David Lesne said in a note Thursday.
Polestar shares have fallen 83% since it listed on Nasdaq in 2022 via special-purpose acquisition company merger.
If Volvo decides to distribute its stake to shareholders, Geely would become a significant new shareholder and the Chinese auto group said in a statement that it will continue to provide full operational and financial support to Polestar as an independent exclusive brand going forward. That support wouldn’t require a reduction of its shareholding in Volvo Car, it added.
Volvo Car Chief Executive Jim Rowan said on a call after outlining the news that a separation from Polestar is a natural evolution and that now is the right time to consider reducing its shareholding, and for Polestar to look for alternative funding.
Write to Dominic Chopping at [email protected]
Read the full article here
