Volvo and Polestar are parting ways financially, as Volvo has decided to discontinue funding for Polestar, the electric vehicle (EV) brand. This move comes at a time when Polestar is gradually expanding its all-electric lineup.
Instead of Volvo, the financial and operational support for Polestar will now come from Geely, the Chinese automotive giant that owns both Volvo and Polestar. Additionally, Geely may become a “significant new shareholder,” as outlined in a Volvo press release.
While Volvo will no longer provide financial support to Polestar, the collaboration between the two companies will continue in areas such as manufacturing and research and development (R&D). Volvo, with its diverse product range, including cars and SUVs with internal combustion engines, as well as upcoming EVs like the EX30 and EX90, will still benefit from this partnership.
In contrast, Polestar exclusively focuses on selling EVs, a market currently experiencing a decline in global sales. The brand, with a limited lineup (currently only offering the Polestar 2 in the U.S.) and a slow introduction of new models, has faced financial challenges.
Following Volvo’s decision to cease funding, Reuters reported that Volvo’s stock saw an increase of more than 30 percent at market open. However, since going public in June 2022, Polestar’s shares have reportedly declined by over 83 percent.
To address its financial difficulties, Polestar announced in a press release that it has reduced its anticipated external funding requirement to approximately $1.3 billion until achieving targeted cash flow break-even in 2025. The company is actively working towards securing the additional external funding necessary.
The future of Polestar remains uncertain, but 2024 is anticipated to be a pivotal year for the company. The Polestar 4 has been launched in Australia, China, and Europe, with expectations of reaching the U.S. later in the year. However, the Polestar 3 SUV has faced delays until the first quarter of 2024 due to software challenges shared with the Volvo EX90.
Looking ahead, the sleek Polestar 5 sedan is scheduled to debut in 2025, followed by the elegant Polestar 6 roadster in 2026. Despite hopes for the success of these models, the current outlook suggests that both the Polestar 5 and 6 could face challenges and potential setbacks.