Chinese automaker Geely agrees to rescue EV maker Polestar
Why it matters: Polestar has won critical acclaim for its vehicles, but the Volvo spinoff has stumbled financially since it went public in a SPAC merger less than two years ago.
Driving the news: Polestar signaled Thursday that Geely is set to become a new, direct shareholder in the company — with Volvo relinquishing its 48% stake primarily to the Chinese automaker, which owns Volvo.
- Bloomberg described it as a "bailout" for Polestar, whose stock was trading at 15 cents Thursday afternoon.
Details: Volvo — which has been providing critical funding to Polestar — "will remain a strategic partner in areas across R&D, manufacturing, after sales and commercial," Polestar said in a statement.
- "I just don't believe Volvo has the capital to lift up Polestar without taking itself down," Tu Le, founder of Sino Auto Insights, tells Axios.
Quick take: Since Volvo spun off Polestar as a separate company, Polestar has struggled to build brand recognition — and it's gone nowhere in China, the world's biggest EV market.
- While the brand's sales rose 6% in 2023, its fourth-quarter sales were down 64% compared with a year earlier.
- "Establishing a whole new brand with all new dealers — that's a big challenge," Autotrader analyst Michelle Krebs tells Axios.
The big picture: While no homegrown Chinese automaker has sold vehicles in the U.S., Geely's increasingly active role in the American market has arguably upended that reality.
- The question now is whether Geely has ambitions of using its U.S. footprint to sell its vehicles directly to American customers.
Zoom in: Polestar has been building a new factory in South Carolina that's poised to go online this year.
- And back in November, Dunne Insights analyst Michael Dunne had noted that Geely founder and chairman Li Shufu was "drawing on his vast arsenal of global brands and alliances to open new channels into the US market."
What they're saying: "Our observation is generally that the Chinese car companies are the most competitive car companies in the world," Tesla CEO Elon Musk said last week on an earnings call.
- He added: "Frankly, I think if there are no trade barriers established, they will pretty much demolish most other car companies in the world."
(Editor's note: Autotrader is owned by Cox Enterprises, which also owns Axios.)