Volvo Shifts Gears: Distribution Of Polestar Shares Signals EV Focus

Volvo is about to distribute 62.7% of its shares in Polestar to other shareholders, reducing its ownership of the electric vehicle (EV) maker to 18%, the Swedish carmaker has said.

Volvo Cars will not contribute further funds to Polestar, but the two companies will maintain a “strong operational collaboration” across research and development, manufacturing, after-sales services, and commercial activities.

According to calculations by Reuters using the most recent exchange rates, the distribution of the stake will take the form of a 2:1 share split and an automatic share redemption process, with the stake's value coming to SEK9.5 billion ($1 billion).

Geely Holding—which also owns Volvo Cars—will purchase the majority of these shares. Volvo Car's majority owner will then take over operational and financial support for Polestar. Volvo said it would use the proceeds from a sale to fund its transition into an EV-only automaker by 2030.

Volvo’s decision follows criticism that it was straining resources. However, the three brands' close operational cooperation and a $1 billion loan from Polestar to Volvo led Sweden's second-largest automaker company to retain an 18% stake in Polestar.

Polestar said that a clearer ownership structure with Geely Sweden Holding as a major new shareholder would help make it easier for it to become independent as a brand. It added that there would be no change for customers or shareholders from any existing collaboration with Volvo and that terms for existing shareholder loans had been extended until Dec. 31, 2028.

“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,” Polestar CEO Thomas Ingenlath said in a statement.

“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.”