Volvo is reportedly set to stop providing funding to Polestar and will transfer responsibility of the EV brand to Geely. According to Automotive News Europe, Zhejiang Geely Holding, the parent of both Swedish brands, will take on the funding for Polestar.
The proposed deal will also see Geely taking over Volvo’s 48% stake in Polestar, relieving the pressure on the Swedish automaker. Volvo’s heavy involvement in Polestar has been criticized by industry analysts, who view the EV brand as a drag on its resources, with some having called for Polestar to be brought back into the Volvo-Geely ecosystem.
The switch, should it happen, will certainly ease things for Volvo, which has been fighting its own battles and last year started to cut 1,300 jobs, part of a drive to reduce costs across global operations.
While welcoming Volvo’s decision to focus its resources on its own development, Geely says it will fully support Polestar to remain as an independent brand. According to analysts, Polestar would need to an additional US$1 billion (RM4,71 billion) over the next 12 months to keep it afloat.
Polestar has been going through a rough patch in recent times. The brand, which Volvo and Geely made into a stand-alone entity in 2017, isn’t just facing increased competition but is also struggling to match the price reductions made by Tesla and BYD.
It failed to meet its 2023 sales target of 60,000 units, delivering 54,600 cars globally last year. The 60,000 unit target was itself a scaling down of the 80,000 unit target it had initially set at the beginning of 2023. Its recent announcement of plans to cut around 450 jobs, or 15% of its workforce, globally may have sped up the bailout process.
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