After years of holding the Polestar name close by, Volvo is planning to shed its ownership stake in the luxury EV brand.
Both owned by Geely, Polestar says it welcomes a direct ownership stake from the Chinese holding company, amid slow sales in 2023.
With the Polestar 3 and Polestar 4 on the horizon, the Swedish EV maker will need a strong year of sales in 2024 to prove itself.
The working relationship between Volvo and Polestar has been one that confuses customers and parking attendants alike. Picking out a Polestar 2 or Polestar 3 from its Volvo brethren isn't exactly hard, as the design similarities are striking when pitted side-to-side.
This shouldn't come as a surprise, either. Originally a Volvo performance sub-brand, Polestar was split from Volvo to be a standalone electric car manufacturer in 2017. These corporate maneuvers were orchestrated by Geely, the China-based parent company of Volvo since 2010, with varying degrees of success for each brand.
However, as Volvo (slowly) launches its own set of EVs, the often-assumed consumer-facing link between the two brands is bound to create friction. And that friction seems to have come to a head, as Volvo Cars announces it will no longer fund the Polestar operation. Previously, Volvo Cars was a 48% shareholder in the electric offshoot, according to SEC filings.
Specifically, executives at Volvo Cars are considering handing over its Polestar ownership stake to the Volvo shareholders, which would make Geely a direct majority owner of the brand. Currently, Geely is the other majority shareholder of Polestar, previously accounting for around 39% of Polestar's stock.
"Geely Holding will continue to provide full operational and financial support to the independent exclusive (Polestar) brand going forward," representatives from Geely said in a statement. "This support will not require a reduction of Geely Holding's shareholding in Volvo Cars."
Polestar has also signaled its interest in becoming a Geely-owned brand, specifically signaling out its parent company as a potential replacement in a statement released today.
"With our growing lineup of exclusive, performance cars, Polestar is in one of the most promising phases of its development," Polestar CEO Thomas Ingenlath said. "We look forward to continued cooperation with Volvo Cars as well as benefiting from even greater synergies with Geely on future-oriented technologies."
However, it's no secret that Polestar is struggling. Competing with brands like Tesla and Hyundai, Polestar's 2023 sales figures show a brand barely making ends meet. Delivering roughly 55,000 units last year (including a mere 6736 units in the US), Polestar only managed a 6% growth year-over-year.
The brand had previously projected an annual sales volume of 80,000 units for 2023, before revising its projections to a low of 60,000 units in November. Beyond the lackluster sales year, Polestar is also cutting jobs internally, announcing a round of layoffs last week. About 450 jobs will be cut globally, accounting for 15% of its current workforce.
The majority of Polestar sales in 2023 were of its compact Polestar 2 sedan, which directly competes with Tesla's ever-popular Model 3. Amid the Tesla-stoked price war, inflation, and claimed shrinking EV demand, Polestar is banking on its Polestar 3 crossover (which is set to hit dealers early this year) to stir up demand in the new year.
Even with new blood on the model lineup horizon, ditching Polestar is panning out positively for Volvo, as its stock shot up 32% at market open following the announcement. Meanwhile, Polestar's stock is down over 83% since it went public in June 2022, further raising questions about the long-term viability of the Swedish manufacturer.
Despite some production issues, the future of Volvo appears to be in good hands, at least for now. From the true-to-form luxury EX90 crossover to the compact, tech-forward EX30, Volvo's EV lineup represents the kind of innovation that Volvo has long been known for. Volvo CEO Jim Rowan sees this as a positive opportunity for Polestar, too.
"Now, Polestar... they've got a very exciting future ahead of them. They've moved from being a one-car company to a three-car company. They've got two brand-new cars coming out very shortly—in fact in the first half of this year—and that's going to take them to a new growth trajectory," Rowan said in an interview with CNBC earlier today.
Clearly, Polestar's future remains up in the air for now, as the brand works to launch its newer, potentially more competitive models.
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