Volvo Cars will discontinue funding all-electric performance brand Polestar, the Swedish carmaker said today in its 2023 financial statement. Describing this move as a “decisive transformation phase,” Volvo plans to reallocate funds from Polestar towards its own projects. The decision comes in the wake of a 43% increase in Volvo's profits in 2023, a record in its 97-year history, the company claims.
Both Volvo and Polestar are subsidiaries of China's Zhejiang Geely Holding group. Under the new agreement, Volvo intends to transfer a portion of its 48% stake in Polestar to parent company Geely, which will become a "significant" new shareholder in Polestar. Geely has promised to provide “full operational and financial support to Polestar” going forward.
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The difference between Polestar and Volvo is rather confusing
Polestar was originally launched as a more performance-oriented, BEV-only, and exclusive sibling to Volvo. But with Volvo's own EV plans taking off successfully, and Polestar struggling, the line between the two brands has blurred.
It’s worth noting that Geely’s 79% stake in Volvo Cars remains unaffected by this development.
2023 was a record year for EV sales for most brands in the U.S., including Volvo. The automaker sold 113,419 BEVs in 2023 globally, a 70% increase compared to 2022. That figure includes the 35,000 plug-in cars (including PHEVs) it sold in the U.S., of which 13,609 were fully electric models. EVs represented 16% of its total global sales volume.
However, the story at Polestar has been somewhat different. It announced early this week that it was laying off 15% of its global workforce to reduce costs. It also struggled to meet its delivery targets in 2023. Despite the setbacks, it said that the rollouts of the Polestar 3 electric performance SUV and the Polestar 4 coupe were imminent.
“Volvo Cars’ and Polestar’s strong operational collaboration across R&D, manufacturing, after-sales, and commercial will continue to benefit both companies,” Jim Rowan, the president and CEO of Volvo Cars AB said. Volvo is bullish on its 2024 outlook as well, stating that it expects a higher year-over-year growth rate in its retail sales in 2024 compared to 2023.
Volvo's 2023 EV sales are based only on two models, the C40 Recharge and the XC40 Recharge. However, this year, Volvo is on track to expand its EV portfolio with the EX30, the smallest and the fastest Volvo ever, its bigger sibling the EX90, which is a full-sized electric SUV, and the EM90 MPV which Volvo cheekily describes as the "Scandinavian living room on wheels."
