Polestar, which split from Volvo Cars in 2017, is struggling due to a global slowdown in demand for electric vehicles. This week it was announced that Polestar will come under the direct control of parent holding Geely, and Volvo Cars will no longer invest in Polestar and will focus on its own development.
In 2010, the Swedish company Volvo Cars was absorbed by the Chinese holding Geely, and in 2015 it itself absorbed the previously courtly but independent tuning studio Polestar. In 2017, Polestar, at the instigation of Geely management, became an independent electric vehicle company, but it still has close technological and financial ties with Volvo. Volvo currently owns approximately 48% of Polestar, and Volvo pays a significant portion of the development costs for new Polestar models.
In the summer of 2022, Polestar, through the SPAC merger mechanism, became a public company and entered the NASDAQ stock exchange — it was assumed that this would bring it additional external investment and in 2025 the company, due to rapid growth, would reach the break-even point. In reality, going public turned out to be a negative factor for the development of Polestar; since the IPO, its shares have fallen in price by about 87%, that is, investors do not believe in Polestar. By the way, the Renault Group recently refused to list its electric vehicle division Ampere on the stock exchange — this decision was made, among other things, taking into account the negative experience of Polestar.
At the end of last year, Polestar sold 54,600 electric vehicles worldwide, which is 6% more than in 2022, but it did not reach the stated goal of 60,000 cars. In 2025, Polestar wants to reach sales of 290,000 cars a year, but now there are serious doubts that it will succeed.
For comparison, let's say that global sales of Volvo Cars in 2023 amounted to 708,716 cars (+15% compared to sales in 2022), of which 113,419 are electric vehicles, sales of which immediately increased by 70%. Volvo Cars wants to reach a sales level of 1.2 million cars per year by the end of 2025.
Last spring, Volvo and Polestar encountered software development problems, which forced them to postpone the market launch of their flagship Volvo EX90 and Polestar 3 electric crossovers until 2024. Polestar management then announced increased cost control and a reduction in sales plans for 2023 from 80,000 to 60,000 cars and the suspension of hiring new personnel, and last week there was talk of layoffs: the company intends to cut 450 jobs — this is approximately 15% of its total workforce.
Today, a further divorce between Volvo and Polestar was announced: the technological ties will remain, but the financial ties will be severed, Volvo Cars will transfer a significant part of its shares in Polestar to the Geely holding (the exact volume has not yet been determined) and will stop financing it. This must be understood in such a way that Geely will soon become the main shareholder of Polestar and will bear the financial burden of its development, and Volvo Cars will begin to spend all its available resources on its own development.
In general, the Polestar crisis at this stage is judging by external indicators, it does not look deadly, but it is happening against the backdrop of a slowdown in the global electric vehicle market, a poor investment climate and the rapid growth of influence of Chinese companies that produce electric vehicles faster and cheaper than Western and traditional Eastern companies from Japan and South Korea . Under the direct control of Geely, anything can happen to Polestar: from rapid development to liquidation or sale — the Chinese do not stand on ceremony with unprofitable brands, easily close them and easily launch dozens of new ones in their place.
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