Access to advanced technologies has endless perks.
Volvo has long been synonymous with its devotion to safety but that alone isn't good enough anymore. Government safety regulations have forced automakers to include a growing number of standard safety systems. In short, new vehicles are extremely safe, so Volvo must expand its identity. Electric vehicles provide the perfect opportunity.
The Swedish automaker announced last March it'll be fully electric by 2030. The Volvo XC40 Recharge is only the beginning of the EV onslaught. Hybrids and plug-in hybrids will soon start being phased out. To further help it achieve its goal, Volvo looked no further than Polestar, also owned by Chinese parent company Geely.
Volvo confirmed earlier this week it's increasing its shares in Polestar to 49.5 percent. This move comes after Polestar raised $550 million in April during its first-ever external funding round. The increased investment will give Volvo the same stake it had before April's funding when its shares were diluted. "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 press release.
For the time being, Volvo doesn't plan to increase its Polestar stake any further. Volvo and Polestar are already very close cousins; the upcoming Polestar 3, for example, will utilize Volvo's next-generation EV architecture. Production will even take place at the Volvo production plant in South Carolina.
Chances are this will be the only Polestar built in America as future assembly is due to move to Europe. For now, the only pure battery electric from Polestar is the Polestar 2 but this will be changing soon. The Polestar 1, an ultra-limited edition grand touring coupe, is a plug-in hybrid. Volvo sees Polestar as not just a great financial investment but also a pool of new technologies it can dip into. Polestar is the performance and tech brand while Volvo is generally more focused on luxury and sustainability.
Access to Polestar's tech and performance know-how will greatly help Volvo as it continues to battle against German players like BMW, Audi, and Mercedes-Benz. We view Polestar more as a Porsche and Tesla rival than anything else.