Why Volvo Cars is increasing its stake in EV maker Polestar

STOCKHOLM — Volvo Cars has bought additional shares in Polestar, the electric-vehicle maker controlled by China’s Geely, Volvo’s parent company.

The investment lifts Volvo’s stake to 49.5 percent. It comes after Polestar raised $550 million in its first external funding round in April.

“The move reflects Volvo Cars’ strong conviction in Polestar’s positioning and exciting potential in the high growth segment for premium electric vehicles,” Volvo said in a statement.

The purchase sees Volvo’s stake returning to the level it previously had, before the April funding round, when Polestar received a cash injection from Chinese investors Chongqing Chengxing Equity Investment Fund Partnership and Zibo.

Polestar produces two electric performance cars in China — the low volume Polestar 1 hybrid GT and the full-electric Polestar 2. A Polestar 3 is planned as well as a model based on the 2020 Precept concept.

Volvo said it had no further plans to increase its stake in Polestar beyond 49.5 percent.

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