Volvo’s Divorce With Polestar Is Official, Geely Picks Up The Pieces

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Volvo announced it will distribute 62.7 percent of its shares in Polestar to other shareholders, reducing its stake in the EV maker to 18 percent. Volvo Cars won’t provide any further funding to Polestar, but the two companies will retain a “strong operational collaboration across R&D, manufacturing, after-sales, and commercial” channels.

Volvo said that the distribution of the Polestar stake will be made by way of a 2:1 share split, followed by an automatic share redemption process. The stake is worth 9.5 billion Swedish crowns which translates to around $920.67 million with the current rates.

More: Volvo And Geely May Need To Take Polestar Private Before it Collapses, Analyst Says

Most of the shares will end up with Geely Holding – a majority owner of Volvo Cars – which will now be responsible for providing operational and financial support to Polestar. On the other hand, Volvo will be able to redirect the funds into the next phase of its transformation, in the course of becoming an EV-only automaker by 2030.

Volvo communicated its intention to ditch Polestar shares earlier this month, following criticism about being a drag on its resources. The significant operational collaborations between the two brands and Polestar’s outstanding loan of $1 billion to Volvo are cited as the reasons that the Swedish automaker chose to retain an 18 percent stake in Polestar.

Polestar’s Reaction

Polestar believes that a “clearer ownership structure” with Geely Sweden Holding as a new and significant shareholder will help it continue its journey of becoming an independent brand. At the same time, Polestar ensures its customers and shareholders that the collaboration with Volvo will continue, as the terms of the existing shareholder loan have been extended until the end of 2028.

In the wake of the announcement, Thomas Ingenlath, Polestar CEO made the following statement: “At the same time as this transaction allows us to welcome new shareholders, our relationship with Volvo Cars remains. Our customers will continue to benefit from our existing collaboration, including across commercial and after sales – providing peace of mind and consistency. The increased support from Geely comes at a pivotal time for Polestar as we roll out our two performance SUVs, Polestar 3 and Polestar 4 – a major step in our development.”