Volvo Cars Group increases stake in EV maker Polestar to nearly 50%
Swedish luxury automobile manufacturer Volvo Cars Group has confirmed that it has bought additional shares of Polestar, taking its stake in the Gothenburg, Sweden-based electric vehicle (EV) maker to nearly 50 per cent. Confirming the stake increase, Volvo said it increased its stake in Polestar to 49.5 per cent by purchasing additional shares in the EV maker. The investment reflects the automobile giant’s strong conviction in the EV maker.
In a newly released statement, Volvo Car Group said, “Polestar's positioning and exciting potential in the high growth segment for premium electric vehicles makes it a good case for investment.”
The Swedish manufacturer further said that it has no plans to increase its stake further. Polestar made several attempts to attract outside investors since early 2019, and the EV maker received a major success earlier this year when a group of long-term investors invested $550 million into the business.
At the time, the EV maker announced that it would utilize the funds to boost its future growth. The company has plans to make technological innovations to the take the market by storm by producing and launching numerous groundbreaking EVs in the coming years.
Polestar is owned by Volvo Car AB and China-based Zhejiang Geely Holding Group, which also fully owns Volvo Car. The EV maker is headquartered in Gothenburg, but all of its EVs are built in China.
Volvo has acquired its additional stake in Polestar from a private investment firm, called PSD Investment. The stake purchase enabled Volvo to return to the level of ownership in the EV maker that it held before a private placement completed earlier this year. It may be noted Eric Li, the chairman of Volvo Cars Group as well as its parent firm Geely, owns PSD Investment. Even after offloading a considerable stake in Polestar to Volvo, PSD Investment will remain the second-largest shareholder in the EV maker.
Polestar is undoubtedly in need of funds to provide a boost to its EV plans. A recently published media report claimed that the EV maker is also preparing to launch an initial public offering (IPO) to collect funds. The report also claims that there a great possibility of the EV maker’s merger with the stock market-listed firm Gores Guggenheim. A potential merger between the two will have a valuation of nearly US$25 billion. However, the report should be taken with a pinch of salt as none of the two companies has officially announced any such deal.
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