The Volvo C40 Recharge electric SUV is displayed during Volvo's “A New Era of Volvo Cars” press conference at the Shilla Seoul Hotel on March 14, 2023 in Seoul, South Korea.
Han Myung Go wire photo | Getty Images
Shares of Volvo Cars rose more than 24% on Thursday after the Swedish automaker announced it would stop financing its subsidiary Polestar Automotive.
Volvo earlier today announced a 10% year-over-year increase in fourth-quarter net sales to 148.1 billion Swedish krona ($14.16 billion), bringing the full-year 2023 total to 552.8 billion kroner. Adjusted operating income jumped to 18.38 million kroner from 12.17 million for the same period in 2022.
The group has announced that it may hand over management of the struggling luxury car brand Polestar to Geely Holding, which owns a majority stake in Volvo.
In its full-year report, Volvo said Polestar “enters the next exciting phase of its journey with a strengthened business plan and cost measures, but the parent company’s focus is on developing Volvo Cars and focusing its resources accordingly.”
“We are therefore evaluating a possible adjustment to Volvo Cars' shareholding in Polestar, including the distribution of shares to Volvo Cars shareholders. This could result in Geely Sweden Holding becoming a significant new shareholder,” the company added.
Volvo Cars CEO Jim Ruane told CNBC's Silvia Amaro on Thursday that this was a “natural development” in the relationship between the two automakers.
“We obviously set up Polestar as a separate company a long time ago, and since then we've been incubating and working with Polestar for a number of years,” Rowan said.
“Now, Polestar… they have a very exciting future ahead of them, they have gone from being a one-car company to a three-car company, and they have two new cars coming out very soon, in fact in the first half of this year, and that will take them onto a new growth trajectory.” “
Volvo Cars owns about 44% of Polestar shares, having acquired the company in 2015, but the local luxury electric car brand has struggled since going public in June 2022, and analysts were concerned it was becoming a burden on Volvo's resources.
This seems like a good time for Volvo Cars to start reducing its stake in Polestar and for the company to “look for financing outside of Volvo,” Rowan said.
“This also allows us and Volvo to fully focus on our growth journey, especially some of the technology investments we need to make over the next two or three years.”
