Volvo Cars has just announced plans to raise 25 billion Swedish crowns, around $2.9 billion USD, with an initial public offering on the NASDAQ Stockholm stock exchange. This is planned to take place before the end of the year. Upon completion, the Geely-owned automaker will become one of Europe's biggest listings of 2021. Geely will still remain Volvo's largest shareholder. Volvo's intention to issue an IPO dates back to at least 2018, but this was delayed for numerous reasons, among them economic and trade tensions with the West and China.
"Volvo Cars believes that its unique structure and focused strategy makes it one of the fastest transformers in the global automotive industry, with mid-decade ambitions dedicated to electrification, sustainability and digitization," the company said.
To be clear: Volvo is not being listed on the US stock exchange, at least not yet. Any securities sold in the US will be "qualified institutional buyers" only. The press release did not hint at any near-term intentions to do so. Last month, we reported Geely was working to secure an initial public offering for Volvo with the goal of making it happen by the end of September. Well, it came close to that deadline.
The major cash infusion comes at a critical time for Volvo as it embarks on an all-electric future. Its entire lineup will be purely battery-electric no later than 2030. Currently, just two BEVs are in the lineup: the Volvo XC40 Recharge and C40 Recharge.
By the middle of the decade, Volvo hopes at least 50 percent of sales will consist of EVs. It's also taking a pragmatic approach to the ways in which consumers purchase cars. For example, Volvo predicts that around 50 percent of future sales will be completed online rather than physically stepping foot inside a dealership. Volvo's push towards carbon neutrality and sustainability took another step forward recently when it announced it will no longer offer leather seats in its vehicles.
Polestar, owned by both Volvo and Geely, also recently revealed plans to go public via a special purpose acquisition company, or SPAC, valued at around $20 billion.