On February 23rd, Volvo Cars announced that its board of directors had decided to propose at the 2024 Annual General Meeting to distribute Volvo Cars' 62.7% stake in Polestar (Polestar Automotive Holding UK PLC) to Volvo Cars' shareholders. If approved by the shareholders' meeting, Volvo Cars' ownership stake in Polestar will be reduced to 18.0% of Polestar's total outstanding shares.
Volvo Cars President and CEO Jim Rowan stated, "Given the significant operational and financial relationships we have with Polestar, it makes sense for us to retain influence over Volvo Cars through a smaller 18% stake in Polestar."
It is reported that Volvo Cars' deep involvement with Polestar has been criticized by analysts, who believe it has to some extent consumed Volvo Cars' resources and hindered its development pace.
As a major shareholder of Volvo Cars, Zhejiang Geely Holding Group will take over from Volvo Cars to continue providing operational and financial support to Polestar, expanding synergies in areas such as core technologies, supply chains, and manufacturing.
Volvo Cars stated that the distribution of shares will be carried out through a 2:1 share split, followed by an automatic share redemption program. Volvo Cars also mentioned that there is an outstanding $1 billion convertible loan between the two parties.
Previously, Volvo Cars' stock price surged by over 26% on February 1st after announcing the cessation of funding to Polestar.
Jim Rowan described this as a "natural evolution" in the relationship between the two car manufacturers. "It is now time for Volvo Cars to begin reducing its stake in Polestar, allowing Polestar to seek funding outside of Volvo at the appropriate time, enabling Volvo to fully focus on its own developmental journey, especially in some of the technological investments needed in the next two to three years."
Volvo Cars aims to achieve full electrification by 2025, with pure electric models accounting for 50% and the rest being hybrids. By 2030, Volvo Cars aims to become a pure electric luxury carmaker. Volvo Cars will continue to accelerate its development according to its strategic plan, promoting the pace of electrification transformation.
