Volvo said on Thursday it would stop funding Polestar and was handing over responsibility for the struggling luxury car brand to Volvo's top shareholder China's Geely.
The announcement sent the Swedish automaker's stock up more than 30% at market opening.
The heavy involvement by Swedish-listed Volvo in Polestar, where it owns around 48% of the shares, has been criticised by analysts who see the stake as a drag on Volvo's resources.
Like other new EV brands and startups, Polestar has struggled to make headway, particularly since Tesla started a price war last year.
The carmaker said earlier this month it had missed its already-reduced delivery targets for 2023.
Polestar's shares are down just over 83% since it went public in June 2022 via a merger with a special purpose acquisition company.
Volvo said it has considered handing over Polestar shares to Volvo's shareholders, which would make Geely a big direct owner in the brand.
Shares in Volvo were up 20% at 08.14 GMT, after they soared 32% at market opening.
Geely in a separate statement welcomed Volvo's decision to focus its resources on its own development.
"Geely will continue to provide full operational and financial support to the independent exclusive (Polestar) brand going forward," the Chinese group said.
"This support will not require a reduction of Geely shareholding in Volvo Cars."
However, the broker Bernstein said it saw a distinct possibility the Geely ecosystem could sell down its shares in Volvo.
Polestar last week said it planned to cut around 450 jobs globally, or about 15% of its workforce, amid "challenging market conditions".
It also said in November it would try to reduce its reliance on external help, publishing a revised business plan which included getting additional loans from Volvo and Geely.
The news could raise questions about the viability of Polestar, which aims to become cash flow break-even in 2025. Some analysts have said it could make more sense to fold Polestar company into Geely.
Volvo, meanwhile, reported a bigger than expected rise in fourth-quarter operating earnings on Thursday, with operating income excluding joint ventures and associates rising to 6.7bn Swedish crowns (about R11,959,309,645) from a year-earlier 3.9bn (about R6,974,750,686).
Analysts polled by LSEG had expected adjusted earnings before tax and interest of 6.5bn (about R11,624,108,866).
Volvo's battery-electric (BEV) vehicle margin was 13% in the quarter, up from 9% in the previous quarter.
The increased BEV margin underpins Volvo CEO Jim Rowan's firm stance that its margins will continue to rise, despite its industry peers sounding the alarm bell around EV demand and many seeing lower-than-expected EV margins.
Volvo to stop funding Polestar, may hand stake to Geely
Image: Supplied
Volvo said on Thursday it would stop funding Polestar and was handing over responsibility for the struggling luxury car brand to Volvo's top shareholder China's Geely.
The announcement sent the Swedish automaker's stock up more than 30% at market opening.
The heavy involvement by Swedish-listed Volvo in Polestar, where it owns around 48% of the shares, has been criticised by analysts who see the stake as a drag on Volvo's resources.
Like other new EV brands and startups, Polestar has struggled to make headway, particularly since Tesla started a price war last year.
The carmaker said earlier this month it had missed its already-reduced delivery targets for 2023.
Polestar's shares are down just over 83% since it went public in June 2022 via a merger with a special purpose acquisition company.
Volvo said it has considered handing over Polestar shares to Volvo's shareholders, which would make Geely a big direct owner in the brand.
Shares in Volvo were up 20% at 08.14 GMT, after they soared 32% at market opening.
Geely in a separate statement welcomed Volvo's decision to focus its resources on its own development.
"Geely will continue to provide full operational and financial support to the independent exclusive (Polestar) brand going forward," the Chinese group said.
"This support will not require a reduction of Geely shareholding in Volvo Cars."
However, the broker Bernstein said it saw a distinct possibility the Geely ecosystem could sell down its shares in Volvo.
Polestar last week said it planned to cut around 450 jobs globally, or about 15% of its workforce, amid "challenging market conditions".
It also said in November it would try to reduce its reliance on external help, publishing a revised business plan which included getting additional loans from Volvo and Geely.
The news could raise questions about the viability of Polestar, which aims to become cash flow break-even in 2025. Some analysts have said it could make more sense to fold Polestar company into Geely.
Volvo, meanwhile, reported a bigger than expected rise in fourth-quarter operating earnings on Thursday, with operating income excluding joint ventures and associates rising to 6.7bn Swedish crowns (about R11,959,309,645) from a year-earlier 3.9bn (about R6,974,750,686).
Analysts polled by LSEG had expected adjusted earnings before tax and interest of 6.5bn (about R11,624,108,866).
Volvo's battery-electric (BEV) vehicle margin was 13% in the quarter, up from 9% in the previous quarter.
The increased BEV margin underpins Volvo CEO Jim Rowan's firm stance that its margins will continue to rise, despite its industry peers sounding the alarm bell around EV demand and many seeing lower-than-expected EV margins.
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