Volvo Cars co-founded the brand Polestar together with China's Geely

EV maker Polestar gets gigantic financial support from its major shareholders

Polestar announced at the end of this week that it had secured $1.6 billion in financing. The finances come from its two main shareholders. Their aim is to help Polestar to deliver on its growth plans in turbulent markets.

Volvo Cars co-founded the brand Polestar together with China’s Geely in 2017. Volvo announced an $800 million loan to the company. The other major shareholder, PSD Investment, will contribute the same amount, as they announced, through direct and indirect financial and liquidity support.

The new investment will provide smooth riding through turbulent times

Volvo, which owns slightly more than 48% of its EV-making company, stated that its loan included provisions for Volvo to convert some of its loans to equity in the event of a future equity raise by Polestar.

Volvo’s EV carmaker CEO Thomas Ingenlath in a statement issued on Thursday said that Polestar appreciates their major shareholders’ continued support at a time when the capital markets are extremely turbulent and unpredictable.

The Swedish automaker stated that the funding, along with previously secured resources, would provide the company with enough funds to last until 2023.

Polestar was listed on the Nasdaq in June after a merger with a special purpose acquisition company (SPAC).

Volvo invests in Polestar EV maker

Swedish carmaker Volvo, like other major automakers, has invested heavily in developing its own electric vehicles in recent years. The company has stated its commitment to supporting its EV carmaker.

Volvo intends to sell only fully electric vehicles by 2030, while Polestar intends to launch three additional vehicles by 2026.

Also, Volvo formed a joint venture with battery manufacturer Northvolt in February. They plan to build a battery plant in Gothenburg that would produce battery cells for electric Volvo and Polestar vehicles.

Carmakers and suppliers, on the other hand, are struggling as costly investments in an electric future. The electric future of vehicles coincides with heating up inflation and skyrocketing energy prices.

Polestar’s third-quarter earnings report is due next week, on November 11th.