Volvo said Thursday it has cut off funding for its electric vehicle subsidiary Polestar — despite the fact that it was one of the first automakers to embrace electric vehicles.
Shares in the Swedish automaker soared more than 30% on Thursday as the company declared Volvo Cars was “committed to concentrating resources and developing an ambitious journey that includes self-developed electric vehicles.” did.
Volvo, which currently owns 48% of Polestar, said it is considering transferring more control of the luxury EV maker to China-based Geely Holding.
Geely is also Volvo’s largest shareholder, and the two companies worked together to launch Polestar.
“Geely will continue to provide full operational and financial support to Polestar,” Volvo said in a release. “As a result, Volvo Cars will no longer provide further funding to Polestar.”
Despite the decision, Volvo touted signs of progress in its internal EV efforts.
Volvo sold 113,419 fully electric cars last year, and the company’s EV sales increased by 70%.
Volvo still plans to fully electrify its vehicle lineup by 2030.
After years of boom in the EV space, automakers and rental companies alike are starting to scale back investment as consumer interest slows.
Rental giant Hertz recently announced plans to sell about 20,000 EVs in its fleet, citing high repair costs and lack of demand.
Tesla, which has been aggressively lowering the prices of its EV lineup in an effort to boost sales, acknowledged earlier this week that it expects sales growth to be “significantly lower” this year.
Polestar has struggled to gain footing since going public through a merger with a special acquisition purpose company (SPAC) in 2022.
The company’s stock price has plummeted more than 80% since its debut.
Earlier this month, the company said it delivered fewer than 55,000 vehicles last year, below its target, as inflation-stricken buyers opted for cheaper alternatives.
Polestar also announced that it would cut approximately 450 jobs, or approximately 15% of its global workforce, due to “difficult market conditions.”
The company doesn’t expect to break even from a cash flow perspective until 2025.
Polestar said Volvo Cars “remains a strategic partner across research and development, manufacturing, aftersales and commercial” and that despite recent setbacks, it has “made significant progress in building its business”. ” he said.
with post wire
