On Thursday, February 1st local time, the stock price of Swedish automaker Volvo soared by over 30%. The company had previously announced its fourth quarter 2023 results and announced that it would stop providing funding to its subsidiary, Polestar Automotive.
As of the time of publication, the increase in Volvo's stock price has narrowed to 21.56%.
The financial report released earlier on Thursday showed that Volvo's net sales for the fourth quarter increased by 10% year-on-year to 148.1 billion Swedish kroner (equivalent to 14.16 billion US dollars), with an operating profit of 6.7 billion Swedish kroner (equivalent to 644 million US dollars) excluding joint ventures and associates. The profit margin for pure electric vehicles was 13%.
Volvo has announced that it will stop providing funding to Polestar and consider transferring its stake in Polestar to other shareholders, making its parent company Geely Holding Group an important new shareholder of Polestar.
Volvo acquired Polestar in 2015 and currently holds approximately 48% of the latter's shares. However, analysts have been concerned that Polestar will drag down Volvo's resources.
Polar Star Motors merged with a special purpose acquisition company (SPAC) to go public in June 2022, and since then, the company's stock price has fallen by over 83%.
Volvo stated that Polestar is entering the next exciting phase by strengthening its business plans and cost actions, but the parent company's focus is on developing Volvo cars and concentrating resources accordingly.
Volvo CEO Jim Rowan stated that this is a natural evolution of the relationship between the two car manufacturers. Luowen said that now is the appropriate time for Volvo to reduce its stake in Polestar and seek financing outside of Volvo.
Geely released a statement on Thursday welcoming Volvo's transformation decision; As a strategic partner and potential direct new shareholder of Polestar, Geely Holdings will continue to provide comprehensive operational and financial support for the Polestar brand. This support does not require a reduction in Geely Holding's stake in Volvo Cars.