Who needs Volvo anyway? Shortly after co-parent company Volvo Cars announced plans to cut ties with Polestar, the EV-centric brand has turned to an all-star lineup of international banks for external funding totaling close to one billion dollars. Polestar’s other owner, Geely Holding, is still very much involved and will also help Polestar continue work to roll out its two incoming electric SUVs and beyond.
Polestar Automotive Holding UK PLC ($PSNY) is an automotive melting pot founded in 2017 with Swedish design roots from Volvo Cars and manufacturing know-how from Zhejiang Geely Holding Group, better known as Geely.
During its seven-year run, Volvo and Geely worked together to bring 2.5 EVs to market. That includes the Polestar 1 PHEV, the flagship Polestar 2 BEV, and the new Polestar 3 SUV, which just kicked off production in China this week but has yet to reach customers.
Beyond those models, Polestar already has three additional EVs in its pipeline, keeping the company plenty busy through 2026. Following an IPO that wasn’t as successful as anticipated, evoking global job cuts, Volvo Cars began to weigh its options on what to do with the EV brand it spun out of its own DNA years ago.
That led to a public breakup announced at the end of January 2024, in which the Swedish legacy automaker let its electric child down softly, describing the parting of ways as a “natural evolution” for both brands. Volvo essentially handled all control over to its partner Geely and cut its funding but said it would remain a strategic partner in Polestar R&D, manufacturing, and after-sales.
Last week, Volvo Cars shared plans to sell 62.7% of its stake to Geely, holding on to its remaining 18%. With close to 80% of Polestar in its portfolio, Geely said it would approve the sale and move forward with the EV brand. However, as large as Geely is, continuing Polestar’s production plans requires massive funding, so it has turned to big banks for help and found several affluent suitors.
Polestar pushes forward sans Volvo, but with fresh funding
According to news from Polestar today, it has successfully secured $950 million in external funding financed by 12 international banks, including BNP Paribas, Natixis, Standard Chartered, BBVA, HSBC, and SPDB.
The funding will be distributed as a three-year loan facility, giving Polestar enough financial runway to continue development and reach its 2025 business targets. As of December 31, 2023, Polestar’s cash was around $770 million, so it was by no means in dire straights when Volvo bailed, but losing that automaker’s funding soured its 2024 outlook.
In addition to bank funding, Geely said it intends to participate in future financing if and when required. Polestar CEO Thomas Ingelath spoke about the fresh funding round:
Securing funding from a syndicate of global banks reflects our partners’ support for Polestar’s growth course. Together with Geely’s full financial support and access to innovative technology and engineering expertise, we have reinforced our path towards cash flow break-even targeted in 2025.
Polestar 3 production is expected to begin in South Carolina in Q2 2024, offering EV production on two continents to serve numerous markets worldwide. Despite the financial relief from bank funding, Polestar still has a lot riding on the success of its 3 and 4 SUV models.
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