Volvo stock was doing well Thursday, but it wasn’t because of a new product launch or something that the Swedish car manufacturer was building.
On the contrary — the stock was up on the news that the company was going to stop doing something.
Shares in Volvo were up 26 percent Thursday after it announced that it would no longer fund its Polestar Automotive, an electric vehicle manufacturer it had previously spun off as a separate subsidiary, according to CNBC.
MarketWatch noted that, only a month into 2024, the year was already off to a rocky start for fans of electric vehicles.
“Earlier this week, French automaker Renault said it has decided to cancel the initial public offering of its electric-car unit Ampere,” the outlet reported. “Ford, meanwhile, has slashed production of its electric F-150 Lightning, a pickup truck that has generated major buzz since its launch.
“Rental-car firm Hertz has said it was dumping about one-third of its EV rental car fleet, replacing the cars with gas-engine vehicles,” it added.
Tesla warned investors of slower growth in 2024 than previously anticipated, as The Western Journal previously reported, and both car manufacturers and retailers have become increasingly concerned about the future of the electric vehicle industry.
Polestar went public in 2022 after having been founded by Volvo in partnership with its Chinese owner, Zhejiang Geely Holding Group, commonly referred to as Geely.
MarketWatch said that Polestar had received $1 billion in loans from Volvo, which Volvo said would be due at the end of 2028, instead of mid-2026 as originally stated.
However, the bigger news was that Volvo would be focusing future investment on its own development — including what the outlet described as “Volvo’s substantial in-house effort to go electric.”
Volvo may also divest itself of its shares in Polestar, which amounts to about 44 percent of the company, according to CNBC, and is considering handing its shares to Volvo’s shareholders.
“This may result in Geely Sweden Holdings becoming a significant new shareholder,” the company told MarketWatch.
“Obviously, we spun out Polestar as a separate company a long time ago, and since then we’ve been incubating and working with Polestar for a number of years,” Volvo Cars CEO Jim Rowan told CNBC’s Silvia Amaro on Thursday.
The company has “struggled since going public” 20 months ago, the outlet noted, but Rowan predicted a bright future for Polestar even as his company would not longer support it.
“Now, Polestar … they’ve have got a very exciting future ahead of them, they’ve moved from being a one-car company to a three-car company, they’ve got two brand-new cars coming out very shortly, in fact in the first half of this year, and that’s going to take them to a new growth trajectory,” he told CNBC.
Unsurprisingly, Polestar’s CEO expressed very similar sentiments.
“With our growing line-up of exclusive, performance cars, Polestar is in one of the most promising phases of its development,” CEO Thomas Ingenland said.
However, Polestar shares were down 84 percent over 2023, largely because of the general slowdown in the EV market, the Financial Times reported.
This article appeared originally on The Western Journal.