Volvo CEO: ‘We don’t withdraw from Polestar entirely’

A few months ago, Volvo Cars announced that it would withdraw its interests in its sister company, Polestar. Today, Volvo confirms that it won’t be the major investor in Polestar anymore, but a total withdrawal seems out of the question.

In an interview with the German newspaper Handelsblatt, Volvo CEO Jim Rowan (59) declared: “We will stay involved in Polestar, but our shareholder’s stake (currently 48%) will presumably be reduced. By how much and how we will proceed, I can’t explain yet, but we will continue to be involved with Polestar.”

Rowan will also stay on the Polestar board: ” I have no plans to alter this in the near future,” he said. In addition to Rowan, his predecessor at Volvo, Hakan Samuelsson, and former Volvo CFO Carla De Geyseleer are also board members. Samuelsson even presides the board.

On their own, but interlinked

When Polestar started in 2017 as a more sporty and fully electric sister company of Volvo, Volvo’s technical know-how and experience were of prime importance to the newcomer. Meanwhile, Polestar now has three different cars in the offering (and others will come), and it has also become a competitor for the Swedes. “From now on, we have to concentrate on our own journey again,” Rowan summarizes the situation.

But to be on their own (both under the Geely umbrella) doesn’t mean there’s no place for collaboration and synergies. At the moment, Volbo builds, for example, Polestar 2 and 3 also in its factories in China and the USA. Many parts and technologies of the Polestar 3 and the coming Volvo EX90 are also common.

The new Polestar 3 electric SUV and the Volvo EX90 have many technical details in common /Polestar

Halved targets

Meanwhile, Polestar is also suffering from a slower demand for EVs worldwide. In 2023, the company had to readjust its sales targets several times, and it delivered only 54,600 cars in 2023 instead of the originally targeted 80,000.

Polestar CEO Thomas Ingenlath talked about producing 290,000 Polestars in 2025 a while ago; now, he has reduced this to a much more humble 155,000 to 165,000 units. To cut costs, he was obliged to lay off 15% of his workforce, and he is duly in search of € 1.2 billion to be able to continue business.

Since the brand’s IPO in June 2022, it has lost some 80% of its value on the American Nasdaq. Nevertheless, Ingenlath has confidence that he will succeed, saying that talks for new investments are very positive and coming to their (positive) end. Of course, there’s also the Geely Group, of which financial experts don’t expect that it will let down its subsidiary.

Volvo recovers

The losses of Polestar, of course, also influenced the Volvo figures. Profit decreased by 17% last year to € 1.25 billion despite increased sales. If one takes the financial Volvo commitment in Polestar out of the equation, the profit would have been at an all-time high at € 2.27 billion.

Volvo’s partial withdrawal from Polestar can really be seen as a liberation. Since the beginning of February, Volvo’s share value has recovered by 25% after a record downward slide. Meanwhile, mother company Geely has declared that it doesn’t have to sell Volvo shares to compensate for the withdrawal of Volvo from Polestar. The Geely holding of Chinese billionaire Li Shufu owns 80% of Volvo Cars.

Comments

Ready to join the conversation?

You must be an active subscriber to leave a comment.

Subscribe Today

You Might Also Like