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 Goo | wireframe image | Getty Images
Volvo Cars shares rose more than 20% 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 announced that it may hand over management of the struggling luxury car brand Polestar to Volvo's majority shareholder, China's Geely Holdings, which holds a 78.65% stake in the company, according to LSEG data.
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, according to LSEG data, after it acquired the company in 2015. The local luxury electric car brand has struggled since going public in June 2022, and analysts were concerned it was becoming a liability for Volvo. . 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.”
In a statement on Thursday, Polestar said it “welcomes Geely Sweden Holding as a potential new direct shareholder,” and that Volvo Cars “will remain a strategic partner in the areas of research and development, manufacturing, aftersales and trade.”
“With our growing portfolio of exclusive high-performance cars, Polestar is at one of the most promising stages of its development,” said Thomas Ingenlath, CEO of Polestar.
“We look forward to continuing cooperation with Volvo Cars as well as benefiting from greater synergies with Geely on future-oriented technologies.”
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