Volvo Announces IPO, Polestar Does SPAC Merger

Volvo Cars has confirmed months of speculation by announcing that it’s planning to go public on NASDAQ Stockholm. On Monday, the automaker stated that it would be seeking to raise 25 billion Swedish kronor (nearly $2.9 billion USD) via the selling of new shares as a way to fast-track its electrification plans. Those include ensuring half its annual volume being represented by EVs and transitioning the majority of its sales stemming from online orders by 2025.

While the targeted IPO valuation is unknown, prior information coming from Zhejiang Geely Holding Group (Volvo’s Chinese parent company) suggested it was aiming for something in the neighborhood of $20 billion. We’ve also learned that the collaboratively owned Polestar would also be going public, except it will be using the always sketchy special-purpose-acquisition-company merger to help pump the stock.

We’re expecting more concrete details as the week progresses. But Reuters is currently speculating Volvo’s valuation at $20 billion while The Wall Street Journal has it set at $25 billion. The duo also had no idea how much stock Geely would retain, though we’re operating under the assumption that the group would like to remain the largest shareholder moving forward. Volvo has asserted that the money will be reinvested into transitioning toward becoming an electric-only automaker by 2030.

Those prospective valuations are huge when compared to manufacturers similar in size to Volvo Cars. Of course, we’ve also seen Tesla running with a market capitalization that hardly seemed to make sense for years. Volvo’s September sales may be down by 30 percent (year-over-year) but the company is trying to capture the more-fashionable corner of the automotive market and get investors excited about growth potential as it swaps to EVs.

There are similarly high bars being set for the performance-focused Polestar. Launched in 2017, the company only has a couple of vehicles on offer. However, it’s working to expand that lineup while targeting a 2.3-percent share of the global premium market by 2025.

From WSJ:

Last week, Polestar, a Swedish electric-vehicle maker jointly owned by Volvo, Geely and others, announced plans to merge with a special-purpose acquisition company and list in New York in a deal that would value the Swedish EV company at roughly $20 billion.

Volvo said last month that it expected to own close to 50 [percent] of the combined company after the completion of Polestar’s merger with Gores Guggenheim Inc.

The Polestar deal generated a pathway for Volvo to pursue its own offering by assigning a value of about $10 billion to its stake.

“It was important to separate the issue,” Volvo Chief Financial Officer Björn Annwall said, adding that investors now see that Volvo, too, after shedding its internal-combustion-engine-manufacturing business is going electric faster than some rivals.

“Investors see that as a clear sign that we’re not only saying we’re going to become electric, we’re doing it,” Mr. Annwall said.

Both companies have set wildly aggressive targets. Polestar has said it plans on adding three new vehicles to the lineup by the end of 2024. It has also said it would need to more than double the number of global markets in which it currently operates to obtain its desired market share by the following year. Meanwhile, Volvo is vying for annual sales averaging 1.2 million units — requiring a roughly 50-percent in sales over the next three years.

[Images: Volvo Cars; Polestar]