Volvo Car’s (VOLCARb.ST) mooted divestment of troubled electric vehicle maker Polestar will put its Chinese owner on a smoother road. The $9.4 billion Swedish carmaker is considering giving some of its 48% stake in New York-listed Polestar to its shareholders, which include Chinese carmaker Zhejiang Geely. That would relieve Volvo Car of the burden of subsidising loss-making Polestar, which has shed over 80% of its market value since its June 2022 listing via a SPAC merger. On Thursday morning, shares in Volvo Car jumped over 20%.
The change may also benefit Geely. The Chinese carmaker still owns around 80% of Volvo Car, which has had a bumpy ride since its 2021 IPO. Even after today’s share price bump, the stock is down by over a third since its market debut. If Volvo Car’s valuation keeps growing, it might help Geely sell down its stake in the future. Admittedly, Geely will now be on the hook for Polestar’s struggles. But having more control of the $4.6 billion EV maker also makes it easier to take it private in the future. (By Karen Kwok)
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