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Volvo Will Stop Funding Polestar EV Brand but Keep Collaborating

2025 polestar 4
Volvo Will No Longer Fund the Polestar EV BrandPolestar
  • Volvo has announced that it will no longer fund Polestar, although the two brands will continue to collaborate on manufacturing and R&D.

  • Geely, the Chinese company that owns both automakers, will now provide full financial and operational support to Polestar.

  • After the move, Volvo's stock rose over 30 percent, according to Reuters, as Polestar has financially struggled and has two new EVs on the way.

Volvo and Polestar are breaking up—financially speaking, that is. The news comes after Volvo announced it will no longer fund Polestar, which features a slowly expanding all-electric lineup. Instead, Geely, the Chinese automotive giant that owns both brands, will now provide full financial and operational support to Polestar going forward. Geely could also become a "significant new shareholder," according a Volvo press release.

Polestar Packs Its Bags

While Volvo won't be giving Polestar money anymore, the two will continue to collaborate on things like manufacturing and R&D. Of course, Volvo also has the benefit of selling cars and SUVs with internal-combustion engines along with upcoming EVs such as the EX30 and EX90.

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Meanwhile, Polestar exclusively sells EVs, which are currently seeing a decline in sales around the globe. Being an all-electric brand with a tiny lineup (right now, the Polestar 2 is the only model sold in the U.S.) as well as a slow rollout of new models has caused the company to struggle.

2024 polestar 3
Polestar

Reuters reported that after Volvo made the move to stop funding Polestar its stock increased by over 30 percent at market open. Since Polestar went public in June 2022, Reuters also reports that its shares are down more than 83 percent.

To address its financial woes, Polestar in a press release said it has "reduced its expected external funding need to approximately $1.3 billion until targeted cash flow break-even in 2025." The company also said it's progressing on getting the extra external funding that's needed.

Polestar's Future

It's unclear what the future holds for Polestar, but 2024 is expected to be a big year for the company. It has launched the Polestar 4, which notably has no rear window, in Australia, China, and Europe; it's expected to reach the U.S. sometime later this year. The Polestar 3 SUV has already been delayed until the first quarter of 2024 due to software challenges with its platform, which is shared with the Volvo EX90 that is also affected.

The sleek Polestar 5 sedan is slated to debut in 2025, with the beautiful Polestar 6 roadster planned to follow in 2026. We think it'd be a tragedy if Polestar isn't able to build the 5 or the 6, but based on the current outlook, the reality is that both models could be a causality.

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