Polestar’s current financial struggles look set to continue after Volvo Cars announced it will no longer provide the EV-only brand with further funding. EV sales are in trouble as global demand is failing to meet sales forecasts and Volvo has had enough
Volvo currently owns a 48 percent stake in Polestar, which was previously the Swedish brand’s performance-car division, however it is now preparing to cut financial ties and pass all future financial responsibility to their mutual Chinese parent company, Geely.
The news follows Polestar’s announcement it would cut 450 jobs globally, which is about 15 per cent of its entire workforce, as it looked to adjust to “challenging market conditions”.
Despite a promising pipeline of future product that includes the Polestar 3, 4 and 5, Polestar has failed to meet sales targets and been forced to cut spending as it struggled with low demand, high inflation and a price war with EV market leader Tesla.
Th Volvo revealtion came within hours of the announcement that Polestar was taking orders in Europe for Polestar 4 – which made headlines because it is the world’s first mass-market car to have no rear window (every motoring journalist seemed to forget van drivers have been managing for years).
And then the marque was dealt another blow when Hertz USA said it was backing out of deal to buy 65,000 Polestars (see out story Hertz pauses plan to buy 65,000 Polestar electric cars as EV sales slump).
As EV sales dropped worldwide, Polestar revised its business plan in November 2023, though still said it required US$1.3 billion in “expected external funding” before it could reach its target of being cashflow break-even in 2025.
“Polestar Automotive, the Swedish electric performance car brand, welcomes Geely Sweden Holding as a potential direct new shareholder,” said an official statement on Polestar’s global website. “Volvo Cars is evaluating a potential adjustment to its shareholding in Polestar including a distribution of shares to its shareholders, with Geely Sweden Holding being the primary recipient. Volvo Cars will remain a strategic partner in areas across R&D, manufacturing, after sales and commercial.”
