Volvo Car Polestar Share Distribution

Volvo Car has made a significant decision to give Polestar shares worth approximately 9.5 billion Swedish kronor ($919.4 million) to its shareholders. This move comes as Volvo reduces its stake in the electric car maker and fulfills its commitment to cease funding Polestar.

Distribution Details

Volvo stated on Friday that it will be distributing 62.7% of its Polestar stake to its shareholders. Post-distribution, Volvo will still hold an 18% stake in the EV carmaker's ownership.

Background of Polestar

Polestar was established by Volvo and its Chinese parent company Geely as an independent EV manufacturer, distinct from Volvo's substantial internal efforts toward electrification. Following a special-purpose acquisition company merger, Polestar was listed on Nasdaq in 2022. However, the share value of Polestar has fallen by 89% since then.

Strategic Decision

Volvo's significant stake in Polestar has posed challenges on its resources, with the joint venture facing financial losses amidst sluggish consumer adoption of electric vehicles in a competitive market. Volvo had provided around $1 billion in financing to support Polestar through a turnaround strategy.

In response, Volvo recently announced its intention to reassess its investment in Polestar and discontinue additional funding.

Future Outlook

The distribution of shares announced on Friday will allow Volvo to refocus its resources on advancing its own transformation initiatives. Geely will continue to offer operational and financial backing to Polestar.

Volvo Car's CEO, Jim Rowan, emphasized the company's commitment to evolving within the realm of next-generation mobility. Despite maintaining a smaller 18.0% stake in Polestar to sustain operational collaborations, Volvo will no longer contribute further funds to Polestar.

The proposal for this distribution will be presented for approval at Volvo's upcoming annual general meeting. The distribution will be executed through a 2:1 share split mechanism.

This strategic move marks a new chapter in Volvo's evolution as it hones its focus on future mobility advancements.